another "EXPLAIN -- NO INDEX?" question

okay, i've seen tom's discourse on the explain feature at
http://www.ca.postgresql.org/users-lounge/docs/7.0/user/c4884.htm
but i can't grok why this index is ignored:

create table servers (
id serial,
name varchar(80),
primary key ( id )
);

insert into servers(name)values('serensoft.com');
insert into servers(name)values('dontUthink.com');
insert into servers(name)values('midwestRepo.com');

create table hits (
at timestamp default now(),
client inet,
server integer references servers ( id ),
url varchar(255),
referer varchar(255),
primary key ( server, at )
);

-- insert thousands of records into hits() table
-- with references for servers.id set properly

hits=# explain
hits-# select * from hits where server = 3;

NOTICE: QUERY PLAN:
Seq Scan on hits (cost=0.00..7870.51 rows=10301 width=90)
EXPLAIN

hits=# explain
hits-# select * from hits where server = 1;

NOTICE: QUERY PLAN:
Seq Scan on hits (cost=0.00..7870.51 rows=10301 width=90)
EXPLAIN

hits=# explain
hits-# select * from hits where (server = 1 or server = 3);

NOTICE: QUERY PLAN:
Seq Scan on hits (cost=0.00..8537.01 rows=20205 width=90)
EXPLAIN

hits=# select count(*) from hits;
count
--------
266611
(1 row)

hits=# select count(*) from hits where (server=1 or server=3);
count
-------
3678
(1 row)

hits=# SHOW enable_indexscan ;

NOTICE: enable_indexscan is on
SHOW VARIABLE

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

with 1.5% (3.7k of 267k) filtered, shouldn't it use the index?

$ psql -V
psql (PostgreSQL) 7.1
contains readline, history, multibyte support
Portions Copyright (c) 1996-2001, PostgreSQL Global Development Group
Portions Copyright (c) 1996 Regents of the University of California
Read the file COPYRIGHT or use the command \copyright to see the
usage and distribution terms.

--
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will(at)serensoft(dot)com
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