createdb -- alternate locations

Hello:

Novice, just installed PGSQL 7.0 on Redhat 6.1.

Everything went smoothly with initial installation and db setup.
However, I've run into some problems subsequently.

To keep it simple, here is a specific problem. Attempting to create a
database in an alternate location, I went through the following steps as
the superuser (postgres):

mkdir /home/postgres/testdata
export PGDATA2=/home/postgres/testdata
initlocation PGDATA2
createdb testdb -D 'PGDATA2'

the last command failed with this error:
"The database path 'PGDATA2' in invalid. This may be due to a character
that is not allowed or because the chosen path isn't permitted for
databases"

I also tried createdb -D 'PGDATA2' testdb, same result.

Any ideas what I'm doing wrong?

Thanks,
J.R. Belding
jrbelding(at)yahoo(dot)com