Updates:
Status: Invalid
Comment #1 on issue 1932 by d...@gnu.org: error: need \paper for paper block
http://code.google.com/p/lilypond/issues/detail?id=1932
The report mentioned NR 3.1.5 File structure as the source of the example.
However, this part of the documentation does not offer this as an example
of input, but rather as an equivalence for simple forms of input.
The syntax does not support layout blocks as part of books, but only at
toplevel, or in scores. This seems to be quite intentional.
I'll push a version of NR 3.1.5 soon that fixes the proposed equivalence.
So I mark this issue as invalid. However, since the documentation is quite
unclear about just where \layout and \paper may be used, I strongly
recommend filing a documentation enhancement issue in that regard.
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