It turned out I had wrong sequrity settings for postgresql stemming from an install of sogo on the same server. Once I fixed those the errors went away.

I'm using 12.04 and Odoo 8.0 but I never had this problem. Check or set the password again or uninstall odoo (apt-get autoremove odoo to make sure everything is removed).

(If for some reason you'll get error like GPG just load a new key using 

gpg --recv-keys YOUR KEY above from the error message)

If your odoo is removed  and there is no GPG error (before you start check nano /etc/apt/sources.list

is this line properly added:  "deb http://nightly.odoo.com/8.0/nightly/deb/ ./"  )

If yes run apt-get install update then apt-get upgrade

then apt-get install odoo and follow the instruction on your screen

Do not change anything just confirm "Y" if needed.

and let the installer do his job. Do not install any additional software manually. Odoo will install all required packages including python, apache and whatever it needs.

Apparently whilst installation you skipped password somehow and now database connection can not be established.

I might be wrong but better do it again in proper way.

So far installed Odoo 8.0 a few ..... times and never met this problem so i'm guessing that either installation procedure is not properly described or .... you made a mistake. :)