CREATE INDEX failing; No space left on device; Database recycling itself

I was trying to create an index on a 37,000,000 row table and received
the following error. Evidently I don't have enough space in my pg_xlog
directory to handle this as a single transaction. The file system for
pg_xlog is allocated 2GB. The following output is from a psql session
directly on the database server.

dw=# CREATE INDEX app_log_username ON ods.applog USING btree (username,
application,

dw(# app_function, app_function_parm, access_date);

PANIC: could not write to file "/pgsdata01/dw/pg_xlog/xlogtemp.6021":
No space left on device

server closed the connection unexpectedly

This probably means the server terminated abnormally

before or while processing the request.

The connection to the server was lost. Attempting reset: Failed.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

The following errors also showed up. So my question is why does the
failure of CREATE INDEX cause all my connections to be terminated and
the database to go into recovery mode? Sounds kind of drastic.

Feb 17 14:07:51 ybcdrdwdb01 postgres[6021]: [361-1] PANIC: could not
write to file "/pgsdata01/dw/pg_xlog/xlogtemp.6021": No space l

eft on device

Feb 17 14:07:51 ybcdrdwdb01 postgres[6021]: [361-2] STATEMENT: CREATE
INDEX app_log_username ON ods.applog USING btree (username, ap

plication,

Feb 17 14:07:51 ybcdrdwdb01 postgres[6021]: [361-3] app_function,
app_function_parm, access_date);

Feb 17 14:07:51 ybcdrdwdb01 postgres[18735]: [474-1] LOG: server
process (PID 6021) was terminated by signal 6

Feb 17 14:07:51 ybcdrdwdb01 postgres[18735]: [475-1] LOG: terminating
any other active server processes.

.

.

. some lines not included

.

.

Feb 17 14:07:51 ybcdrdwdb01 postgres[18735]: [476-1] LOG: all server
processes terminated; reinitializing

Feb 17 14:07:51 ybcdrdwdb01 postgres[6116]: [477-1] LOG: database
system was interrupted at 2005-02-17 14:07:49 CST

Feb 17 14:07:51 ybcdrdwdb01 postgres[6116]: [478-1] LOG: checkpoint
record is at 31/2EB0B974

Feb 17 14:07:51 ybcdrdwdb01 postgres[6116]: [479-1] LOG: redo record is
at 31/2EB0B974; undo record is at 0/0; shutdown FALSE

Feb 17 14:07:51 ybcdrdwdb01 postgres[6116]: [480-1] LOG: next
transaction ID: 39819973; next OID: 39655490

Feb 17 14:07:51 ybcdrdwdb01 postgres[6116]: [481-1] LOG: database
system was not properly shut down; automatic recovery in progress

Feb 17 14:07:52 ybcdrdwdb01 postgres[6116]: [482-1] LOG: redo starts at
31/2EB0B9B4

Feb 17 14:08:24 ybcdrdwdb01 postgres[6116]: [483-1] LOG: could not open
file "/pgsdata01/dw/pg_xlog/0000003100000078" (log file 49,

segment 120): No such file or directory

Feb 17 14:08:24 ybcdrdwdb01 postgres[6116]: [484-1] LOG: redo done at
31/77FFDD44

Version is PostgreSQL 7.4.3 on i686-pc-linux-gnu, compiled by GCC gcc
(GCC) 3.2.2

I am also wondering why CREATE INDEX has to generate so much activity in
the log. The recovery of a corrupted index would be to send the CREATE
INDEX command back to the database.

Finally can someone give me a calculation that would tell me how much
log space the CREATE INDEX command is going to take? I still need to
get the index created with the system I have.