hmmm... well it works for me... are you executing it from psql or from your deployment environment? if you execute "\df point_distance" from within psql do you get a result like this?
List of functions
Result data type | Name | Argument data types
------------------+----------------+---------------------
double precision | point_distance | point, point
(1 row)
If it works in psql but not in your application then we can't really help you, and if your database isn't recognising the builtin point_distance function we also can't really help you... you should probably talk to the pgsql-general mailing list over at
http://www.postgresql.org/lists.html...