Is it possible to return custom type as proper ROW?

Pgsql 8.1.4.

I want return custom type from function as row, not as values in brackets (1,2).

I have following type and function:

CREATE TYPE new_item_return_type AS
(item_id bigint,
last_update timestamp without time zone);

CREATE OR REPLACE FUNCTION new_item( new_title int8, new_user_id int8)
RETURNS new_item_return_type AS
$BODY$
DECLARE
ret new_item_return_type%ROWTYPE;
BEGIN
INSERT INTO item (user_id,title) VALUES (new_user_id,new_title) ;
ret.item_id:= currval('item_id_seq');
SELECT time_last_update INTO ret.last_update FROM item WHERE id
=ret.item_id;
RETURN ret;
END;
$BODY$
LANGUAGE 'plpgsql' VOLATILE;

Seems like in DECLARE ret new_item_return_type%ROWTYPE;
%ROWTYPE is ignored.

When I run SELECT public.new_item(3,2);
I get :
new_item_return_type
---------------------------------
"(32,"2006-10-11 10:14:39")"

I want to get:
item_id | last_update
-------------------------------------
32 | 1234-12-12 12:12:12

Is it possible ? I am using the wrong approach?

Thanks.