The following bug has been logged online:

Bug reference: 2749
Logged by: Hagen
Email address: sixtus (AT) gmail (DOT) com
PostgreSQL version: 8.2beta2
Operating system: OSX
Description: Function's final statement must be a SELECT
Details:

create function test(text) returns table as $sql$
insert into table(value) values($1) returning *;
$sql$ language sql;


really should work now, instead I get:
PGError: ERROR: return type mismatch in function declared to return table
DETAIL: Function's final statement must be a SELECT.

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"Hagen" <sixtus (AT) gmail (DOT) com> writes:
No doubt, but it's not happening for 8.2. See thread here:
http://archives.postgresql.org/pgsql...0/msg00665.php
There's a lot more to it than meets the eye :-(

regards, tom lane

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TIP 9: In versions below 8.0, the planner will ignore your desire to
choose an index scan if your joining column's datatypes do not
match