Based on the zero information I have I'm going to assume that there was probably more knowledge on the team about how to make MySQL do what they needed than Postgres. That's usually all the reason anyone really needs.
That's not my take on it. Their old PostgreSQL system was largely monolithic, they needed something that scaled well horizontally, so they went with MySQL. Makes perfect sense to me.
PostgreSQL has many, many strengths over MySQL, but historically replication wasn't one of them. Built-in replication didn't come to PostgreSQL until version 9, and until then various poorly scalable trigger based log shipping schemes (like Slony) were used. I wouldn't be surprised if PostgreSQL's built-in replication system with version >= 9 works quite well nowadays, but I think at the time Etsy were considering the switch there was still quite a lot of FUD around replication.
