I recently started receiving this error as well, this was because I
disabled autocommit.
With the following option in .psqlrc the error doesn't wait for a
rollback but automatically creates a savepoint allowing you to fix the
error and continue:
This is now in my .psqlrc:
\set AUTOCOMMIT off
\set ON_ERROR_ROLLBACK on
http://www.postgresql.org/docs/9.1/static/app-psql.html look for
ON_ERROR_ROLLBACK
"When on, if a statement in a transaction block generates an error,
the error is ignored and the transaction continues. When interactive,
such errors are only ignored in interactive sessions, and not when
reading script files."
