Stored procedures in postgresql?

I just started looking at the PostgresSQL server. Not yet installed,
just browsing the on-line docs and mail list.

I was recommended having a look at PG from an opensource perspective.

We have been using Microsoft SQLServer 2000 for a long time so that is
my reference when asking "silly" questions. Please have in mind that I
am just loking to see if there is any chance that we can switch to PG
from MSSQL.

First question:
Is there a way to store procedures inside the PG database so that the
business logic does not have to be supplied via SQL calls from each
client?

What we have been doing for the last 5 years is to program literally
all of the important logic as TransactSQL procedures in the MSSQL
database. The clients only interact wit the database via calls to the
procedures, thus making it possible to change the behaviour in one
place only without updating the client applications whenever needed.

Is PL/pgSQL (http://www.postgresql.org/docs/8.1/static/plpgsql.html)
usable in the same way as TransactSQL in MSSQL?
Specifically, does it support:
- encryption (to hide the source from the customers)
- precompilation (to increase execution speed)
- @@IDENTITY (to read the unique identifier from a newly created line)

and is there a converter from TransactSQL???

Bo Berglund