transactions in functions, possible bug or what I'm doing wrong?

Hi All,

PostgreSQL 7.4.5

assume this script:

---
create table test_table
(
id serial,
test_value text
) without oids;

insert into test_table
(test_value)
values ('A');

insert into test_table
(test_value)
values ('B');

insert into test_table
(test_value)
values ('C');

insert into test_table
(test_value)
values ('D');

CREATE OR REPLACE FUNCTION test_with_transaction()
RETURNS text AS
'declare my_test_record record;
declare my_return_value text;

begin
my_return_value := '''';
start transaction;
for my_test_record in select * from test_table
loop
my_return_value := my_return_value || my_test_record.test_value;
end loop;
return my_return_value;
commit;
end;'
LANGUAGE 'plpgsql' VOLATILE;

CREATE OR REPLACE FUNCTION test_without_transaction()
RETURNS text AS
'declare my_test_record record;
declare my_return_value text;
begin
my_return_value := '''';
for my_test_record in select * from test_table
loop
my_return_value := my_return_value || my_test_record.test_value;
end loop;
return my_return_value;
end;'
LANGUAGE 'plpgsql' VOLATILE;
---

Why does select test_without_transaction();
return this info:
"ABCD" (as should be)

and select test_with_transaction();
returns this error?

ERROR: SPI_prepare() failed on "start transaction"
CONTEXT: PL/pgSQL function "test_with_transaction" line 6 at SQL
statement

I've been investigating the matter in the doc I have, but to no avail.
google was not helpful either.

any suggestion? is this a bug? or the bug resides in my head?

regards,

Riccardo