From what I gather, like most languages, PHP doesn't 
support 'nested' methods. (And therefore I doubt this is 
a bug)

Where you are calling f() is ambigous. As far as PHP is 
concerned f() is probably a global function and not a 
method embedded inside a::g().

PHP supports declaring functions "inline", i.e. almost anywhere in a code. Such function is declared as global wherever it is declared. Hence, I don't see any ambiguity if a function is declared inside a method. PHP doesn't support adding new methods into existing class. That's why a function declared in method can only be a global one.

PHP does not support nested functions. Still we need to disable this.

Wait a minute, PHP doesn't support nested functions?

Holy shit, documentation lies!

http://www.php.net/manual/en/language.functions.php
"Example 12-3. Functions within functions"

Do we need to file a documentation bug, too?

While nested functions are maybe useful feature for someone declaration of a function inside the body of a method (which happens to be a function inside a class) is _ambigious_ . Why? There is no reserved word "method" for marking methods of a class and "function" is used so when it is between {} after class name "function" creates a method of the class. IMO "function" inside a method should not be possible.

IMHO, Nested Functions are BAD&WRONG, thus they should be disabled. 

Firstly, when you DECLARE a function inside a function, you have a redeclaration problem. Try to execute the parent function twice and most likely you'll receive a message: "Fatal error:  Cannot redeclare XXXX". 

OK! Some may dispute: "let's create an undeclare_function() so as to allow at the end of the function undeclare the child function. It would enable to reinvoke the parent function whenever we like". Well, THIS IS ALSO B&R. Why would you undeclare a function that you're going to use?

Secondly, if a function needs to work in a closed (encapsuled) environment, well, I think you need a CLASS, not a function. In a class you may have a public, private or protected variables invoked by either public, private or protected methods.

Thusly, a code like this (sorry the indentation, I want to save space):
class A
{ 
  function b(){}
  function c(){}
  function d(){}
  function g(){ 
    echo "function g - begin\n";
    function f(){echo "function f\n";} 
    echo "function g - end\n";
  }
}

should be written like this:
class A
{ 
  function b(){}
  function c(){}
  function d(){}
  function g(){ 
    echo "function g - begin\n";
    f::f();
    echo "function g - end\n";
  }
}
class f{
    function f(){echo "function f\n";} 
}

$obj = new A();
$obj->g();

So, the rationale is, why you need to have function within function if you've got classes?

OH! In time! Just to reinforce the first and the second paragraph of my last comment.

Why would you create a function that should be invoked JUST ONCE? Initialize environment? It makes no point. You can do it directly in the code, using "if" to distinguish any situation of environment that one may have.

Assigned to the mastah..

Mind you that such code _IS_ working PHP4 so it is breaking BC and not listed on http://www.zend.com/manual/migration5.incompatible.php 

As to why it could be useful.. to do recursion and not register a function in global scope. (Of course there are methods for this aswell.)

Fixed in CVS HEAD and PHP_5_0.