BUG #5232: plpythonu s=s.op() raises an exception

The following bug has been logged online:

Bug reference: 5232
Logged by: David Gardner
Email address: dgardner(at)creatureshop(dot)com
PostgreSQL version: 8.4.1
Operating system: Debian, amd64
Description: plpythonu s=s.op() raises an exception
Details:

If I create the following:
CREATE OR REPLACE FUNCTION pyreplace(src text,s text)
RETURNS text AS
$BODY$
try:
src=src.replace(s,'')
return src
except Exception,e:
return str(e)
$BODY$
LANGUAGE 'plpythonu' VOLATILE
COST 100;
ALTER FUNCTION pyreplace(src text,s text) OWNER TO dgardner;

Then:
SELECT * FROM pyreplace('this is a very long string','is');
pyreplace
---------------------------------------------------
local variable 'src' referenced before assignment
(1 row)

However in python I can do:
def pyreplace(src,s):
try:
src=src.replace(s,'')
return src
except Exception,e:
return str(e)

pyreplace('this is a very long string','is')
-----
produces:
'th a very long string'