Using Ubuntu 12.04 it appears to work fine for me:
jon@minerva:~$ sudo apt-get install python-psycopg2
[sudo] password for jon:
Reading package lists... Done
Building dependency tree
Reading state information... Done
Suggested packages:
python-psycopg2-doc
The following NEW packages will be installed
python-psycopg2
0 upgraded, 1 newly installed, 0 to remove and 334 not upgraded.
Need to get 153 kB of archives.
What error are you getting exactly? - double check you've spelt psycopg right - that's quite often a gotcha... and it never hurts to run an apt-get update
to make sure your repo. is up to date.