PL/SQL trouble

Hi,

I really don't understand following PostgreSQL 7.2.3 behaviour:

$ psql mydb
mydb=> CREATE FUNCTION MONDAY(timestamp) RETURNS DATE AS '
DECLARE
var1 date;
BEGIN
select into var1 to_date($1::date-(case when extract(DOW from
timestamp $1) = 0 then 6 else (extract(DOW from timestamp $1)-1) end));
RETURN var1;
END'
language 'plpgsql';

CREATE
mydb=> select MONDAY('now'::timestamp);
NOTICE: Error occurred while executing PL/pgSQL function MONDAY
NOTICE: line 4 at select into variables
ERROR: parser: parse error at or near "$2"
mydb=> \q

But I've not inserted any $2 there.
I've rewritten the same function in other ways but I've got the same error.

I thank you in advance for any hints.

Bye, \fer