Well, it looks like I have to answer my own question. Sorry ESRI support, but I have yet to have one of my incidents solved properly. Here is what I found. While inspecting the output via the Data Interop Tool it appears the data in postgresql/postgis has been labeled as postgis_multisurface (via the Data Interop Tool). It looks like the Data Interop is assigning a geometry type that is not supported by postgis 1.5.
** This is the documentation from PostGIS.
"The well-known text extensions are not yet fully supported. Examples of some simple curved geometries are shown below:"
CIRCULARSTRING
COMPOUNDCURVE
CURVEPOLYGON
MULTICURVE
MULTISURFACE
So, I have 2 possible solutions. First, we could go back to using ArcGIS 9.3.1 because the Data Interop tool worked just fine in the older version. Second, we have built file geodatabase support into GDAL/OGR and we can just use the ogr2ogr command.
Thanks for your help Bruce. I will contact ESRI support regarding this issue.