The below function works in 7.3 (returns nothing, but no errors).
rbttest=# begin;
BEGIN
rbttest=# create or replace function service.test(integer)
rbttest-# returns setof service.service
rbttest-# as '
rbttest'# declare
rbttest'# v_service service.service%rowtype;
rbttest'#
rbttest'# begin
rbttest'#
rbttest'#
rbttest'# return;
rbttest'# end;
rbttest'# ' language plpgsql;
CREATE FUNCTION
rbttest=# select * from service.test(1);
ERROR: cache lookup failed for type 0
CONTEXT: compile of PL/pgSQL function "test" near line 2