User Authentication and Sessions? + Questions on Postgre vs MySQL

[eluser]Rick Jolly[/eluser]
Question #1:
CI doesn't use native php sessions so if you want to use $_SESSION, then don't use CI's session class. Yes CI's sessions currently store session data in the cookie, so if you don't want to use encryption, then you should consider native sessions or one of the session libraries in the wiki capable of storing session data in the database.

Question #2:
Is there any reason not to choose MySQL? No.

Question #3:
Databases are for storing data, so I'd just leave it at that. I'm not sure if I understood your question, but php doesn't have application state, so it can't store your data in memory between web requests. You'd have to retrieve the data from database or file on each request.