BUG #2788: Create Function operator Broken?

The following bug has been logged online:

Bug reference:      2788
Logged by:          Shawn Tayler
Email address:      stayler@washoecounty.us
PostgreSQL version: 8.1.5
Operating system:   Linux 2.6.17
Description:        Create Function operator Broken?
Details:

I have been through the online DOC's the FAQ and can find nothing wrong with
it.  So I am thinking its a bug.

CREATE FUNCTION default_status() returns null AS
'BEGIN
update status set wc to false, np to false, elk to false, sp1 to false,
sp2 to false, wc_rep to false, np_rep to false, elk_rep to false, sp1_rep to
false,
sp2_rep to false;
END;'
language 'sql';

It throughs a syntax error at the 'AS' and I can't seem to figure out why.

Sorry if this is not a real bug.

Shawn