modularize the file database.yml.sample
provide cp command for database.yml operations
move commands to new lines for easier copy and paste
[pg] the PG gem only requires Postgres >= 8.3.
https://bitbucket.org/ged/ruby-pg/wiki/Home#!requirements

I'd suggest removing this to ensure the README is super
simple and inviting for contributors. From the short code
browsing, it doesn't look like the Rails app does anything
that specifically relies on 9.2.x - but I could be wrong :).
update & clarify development setup instructions