I'm far from a postgres expert but I think this handled on postgres' end of things.

When my pg_hba.conf just had the line:
host    all         all         127.0.0.1/32          md5

Then I got the same exception you mention. If you add:
host    all         roundup     127.0.0.1/32          trust

(where roundup is whatever username you're using for the roundup user) then it should work.

I just tested it on my postgres 8.2/psycopg 2.0.5.1 and it worked.