PQexecParams not seeing params

I am using the libpq client library from 8.1.4 in an application that  
is intended to be compatible with databases hosted on both 7.4 and  
8.1.  At least when talking to a 7.4 server, the following statement:

res = PQexecParams (pgc, "FETCH 100 $1", 1, NULL, paramValues, NULL,  
NULL, 1)

results in "syntax error at or near $1 at character 11".

The documentation says the parameters are referred to in the command  
string as $n.  Is this not always the case?  What am I missing?

since PQexecParams was present in 7.4 I am assuming the server has  
the sufficient protocol level to support it.