ERROR: parser: parse error at or near "execute"

Christian Villa Real Lopes (chris_br(at)email(dot)com) reports a bug with a severity of 3
The lower the number the more severe it is.

Short Description
ERROR: parser: parse error at or near "execute"

Long Description
I created a function to drop a table if it exists. On pgsql-7.0.3 this function returns an error, as follow :

template1=# SELECT func_drop_table('friend');
ERROR: parser: parse error at or near "execute"

On pgsql-7.1.2 this function works fine and no error returns just the following lines :

func_drop_table
---------------
friend

Sample Code
CREATE TABLE friend (
firstname CHAR(15),
lastname CHAR(20),
city CHAR(15),
state CHAR(2),
age INTEGER
);

CREATE FUNCTION "func_drop_table"(TEXT)
RETURNS TEXT AS '
DECLARE
v_reg RECORD;
v_tab TEXT;
BEGIN
FOR v_reg IN SELECT * FROM pg_tables WHERE tablename LIKE $1 LOOP
v_tab := ''DROP TABLE '' || v_reg.tablename || '';'';
EXECUTE v_tab;
END LOOP;
RETURN $1;
END;' LANGUAGE 'plpgsql';

SELECT func_drop_table('friend');

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