Slow query problem

Hi,

We've set up a little test box (1GHz Athlon, 40G IDE drive, 256M RAM,
Redhat 9) to do some basic comparisons between postgresql and firebird
1.0.3 and 1.5rc8. Mostly the results are comparable, with one
significant exception.

QUERY
select invheadref, invprodref, sum(units)
from invtran
group by invheadref, invprodref

RESULTS
pg 7.3.4  -  5.5 min
pg 7.4.0  -  10 min
fb 1.0.3   -  64 sec
fb 1.5     -   44 sec

* The invtran table has about 2.5 million records, invheadref and
invprodref are both char(10) and indexed.
* shared_buffers = 12000 and sort_mem = 8192 are the only changes I've
made to postgresql.conf, with relevant changes to shmall and shmmax.

This is an explain analyse plan from postgresql 7.4:

                                                             QUERY PLAN

------------------------------------------------------------------------------------------------------------------------------------


GroupAggregate  (cost=572484.23..601701.15 rows=1614140 width=39)
(actual time=500091.171..554203.189 rows=147621 loops=1)
   ->  Sort  (cost=572484.23..578779.62 rows=2518157 width=39) (actual
time=500090.939..527500.940 rows=2521530 loops=1)
         Sort Key: invheadref, invprodref
         ->  Seq Scan on invtran  (cost=0.00..112014.57 rows=2518157
width=39) (actual time=16.002..25516.917 rows=2521530 loops=1)
 Total runtime: 554826.827 ms
(5 rows)

Am I correct in interpreting that most time was spent doing the sorting?
Explain confuses the heck out of me and any help on how I could make
this run faster would be gratefully received.

Cheers,

Bradley.