You probably want to change the type of your ParentID to an integer, which is the underlying type of serial.
CREATE TABLE Person(
ID serial PRIMARY KEY,
Description text,
Name varchar(5),
ParentID integer,
FOREIGN KEY (ParentID) REFERENCES Person(ID)
);
The documentation for the integer and serial data type is available here: http://www.postgresql.org/docs/current/static/datatype-numeric.html