My use of postgres has confirmed that test is the preferred type over varchar(), however, some things like cold fusion over ODBC have problems with text as a type that have to be overcome with some new odbc rules.
The real key to good performance from postgres is to use the right type of index in the right type of application.
Take a look at the every day user's guide or the detailed guide that come with postgres for a good explanation of which index types are best for which schema designs.