Erwin Brandstetterless info
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PostgreSQL: performance descrease due to index bloatper
Are you serious about version 8.1 or is that a typo? For 8.1 I have quite an obvious idea what you should do: upgrade to a more recent version, preferably the current version 9.1. 8.1 has reached end of live in 2010, there have been countless improvements.
Get back the Disk space from Postgresql
In that case you might consider CLUSTER instead, followed by ANALYZE. Optimizes best and all indexes as well. You could chose an index for that which sorts data according to typical queries - another benefit on the side.