[plt-scheme] Using packages

I'm trying to understand how to use packages. I can't seem to figure out 
a package definition which makes mzscheme happy:

(require (lib "package.ss"))

(package p1 (x)
   (define (x)
      (display "x")))

Results in:

compile: variable used out of context in: current-package1

I've tried pasting simple examples from the HelpDesk package topic which 
result in the same error. Any ideas on where I've gone wrong? My 
selected language in DrScheme is Textual.

--Kevin