The problem is, when restoring a dump, a failure at the some point might cause the subsequent commands to produce wrong results (e.g. I redefine a builtin function with a plruby function with different behaviour, but plruby failed to be installed due to wrong path. Thus the subsequent commands are executed using the builtin function which is not the expected one.) Furthermore, you can't check on psql exit code to see whether _any_ command was not successfully executed.
Of course one should examine the full psql output after a restore anyway, and the option to exit immediately after an error can save time (especially for large dumps).
-- dave
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