What is the difference between "service restart" and "service reload"

• restart = stop + start
• reload = remain running + re-read configuration files.

What you said is correct, reload tells the service to reload its configuration files. That means it should be sufficient to reload the configuration; however there may be certain services that "don't follow the rule" or that won't reload config files. Due to this you're probably safer with restart. I personally do not use postgresql, so I don't know.

Not all services support reload. For those that do, it is usually preferable to restarting (i.e. reloading causes less or no downtime).

The Debian Policy Manual specifies that every /etc/init.d/ script should support a force-reload action, which means reload if the service supports it, and restart if the service doesn't support reloading.

I'm not sure how that translates into the modern Ubuntu upstart world.