How to successfully create a new function?

Good day! A little help, please....

Postgresql 8.3
pgAdmin III v.1.8.4

Creating a new function, or modifying an existing function to:

CREATE OR REPLACE FUNCTION "sp_SetScenario"(scen character varying) RETURNS void AS
$BODY$DECLARE
sqlStatement varchar(500);
BEGIN
SET sqlStatement = 'ALTER USER postgres WITH DEFAULT_SCHEMA = $1';
EXEC(sqlStatement);
END;
$BODY$
LANGUAGE 'sql' VOLATILE
COST 100;

Results in a pop-up message:

pgAdminIII
An error has occurred
ERROR: syntax error at or near "varchar"
LINE3: sqlStatement varchar(500);
^

Thank you for your time!

Jim

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