O.k., I think you are right. I have tinyerp 4.0.3 running on SME7.2 using postgresql 7.x and python 2.3, but I was running into major problems while I tried to update to 4.2.0 yesterday. The update-scripts wouldn't work and I wasn't able to pg_restore databases. Don't know if the old postgresql or the old python was the reason and first I thought of bugs in tinyerp...
So I migrated the database and tinyerp-server 4.0.3 to a debian etch machine (postgresql 8.1, python 2.4) and the problems were suddenly all gone and I could update to 4.2.0.
So running tinyerp on SME7.2 doesn't seem to be the best idea at the moment. I once tried to update postgresql to 8.1 on SME and ended in complete reinstall of SME, so i've become careful. I think I'll stay on the debian machine for tinyerp until SME8.0 arrives.