out of memory error with loading pg_dumpall

Greetings.
I am attempting to create an exact copy of our production database/cluster on a different server for development. I created a dumpall file which is 8.7GB. When I attempt to run this in psql on the new server it seems okay and then I got a string of "invalid command \N" lines" and then "out of memory" in the command prompt and then in the postgres log it states at the end,

CST LOG: could not receive data from client: Unknown winsock error 10061
CST LOG: unexpected EOF on client connection

I am running it on a Windows 2008 server with 8 GB Ram and dual 2GHz processors. I have the "postgres.conf" file set to 1GB of shared buffers. The production and new server are both running PostgreSQL 8.4 with PostGIS 1.4.

Am I going about this in the correct way? How can I debug to figure out what it happening? Can/should I just dump each database individually and drop and reload each database?

Any help would be greatly appreciated.
Dara