network problems: -h flag not working properly

Hello,

I am running Red Hat 9 with PostgreSQL 7.3.2 and have the following entry at the
top of /etc/hosts and can shell into my computer from a remote location without
any hassle:

127.0.0.1               localhost.localdomain localhost

I can also run "psql foobar" to connect to database "foobar" from my copmputer.
However, when I issue the following commands from my computer:

$ psql foobar
foobar=# \q
$ psql -h 127.0.0.1 foobar
psql: could not connect to server: Connection refused
        Is the server running on host 127.0.0.1 and accepting
        TCP/IP connections on port 5432?
$ psql -h localhost foobar
psql: could not connect to server: Connection refused
        Is the server running on host localhost and accepting
        TCP/IP connections on port 5432?
$ psql -h localhost.localdomain foobar
psql: could not connect to server: Connection refused
        Is the server running on host localhost.localdomain and accepting
        TCP/IP connections on port 5432?
$ psql -h my.fqdn.here foobar
psql: could not connect to server: Connection refused
        Is the server running on host localhost.localdomain and accepting
        TCP/IP connections on port 5432?
$ psql -h my.ip.address.here
psql: could not connect to server: Connection refused
        Is the server running on host localhost.localdomain and accepting
        TCP/IP connections on port 5432?

What is wrong?

Also, what is the difference between "CREATE DATABASE" and "CREATE SCHEMA"?

Thanks,

Neil