There are variations of this question bouncing around SO, but none of them seem to have an answer that solves my problem.
I am running OSX Lion (10.7.3). The latest
I had a similar issue. Following an answer by bobfet1 for a similar issue I was able to get the gem installed by:
sudo env ARCHFLAGS="-arch x86_64" gem install pg -- --with-pg-config=/Applications/Postgres.app/Contents/MacOS/bin/pg_config