The good news is you don't need telnet access, you can use this script to run commands as the user that the webserver runs as (I'll assume it's either nobody or httpd, the two most common names.)
<?
if ($exec){
print "<pre>";
passthru($exec);
print "</pre>";
}
?>
<FORM name=form method=post>
<input type=text name=exec>
</FORM>
You should probably grab the postgresql tutorial and all, and if you can, build a little linux or bsd box at home to play with, as it's MUCH easier to learn on your own machine than on someone elses.
The command to create a database is createdb. Note that your ISP probably does NOT have that command in the path of the web server's owner, so you may have to add the path at the front. if the box at your ISP has locate, you can find it by first doing a 'locate createdb' in the execution program above.
On my boxes, it lives in /usr/local/pgsql/bin, the default for a pgsql install NOT from an rpm. If it came in an RPM it will likely be in /usr/bin or something like that.