The read_sql docs say this params argument can be a list, tuple or dict (see docs).
To pass the values in the sql query, there are different syntaxes possible: ?, :1, :name, %s, %(name)s (see PEP249).
But not all of these possibilities are supported by all database drivers, which syntax is supported depends on the driver you are using (psycopg2 in your case I suppose).
In your second case, when using a dict, you are using 'named arguments', and according to the psycopg2 documentation, they support the %(name)s style (and so not the :name I suppose), see http://initd.org/psycopg/docs/usage.html#query-parameters.
So using that style should work:
df = psql.read_sql(('select "Timestamp","Value" from "MyTable" '
'where "Timestamp" BETWEEN %(dstart)s AND %(dfinish)s'),
db,params={"dstart":datetime(2014,6,24,16,0),"dfinish":datetime(2014,6,24,17,0)},
index_col=['Timestamp'])