here is my code:
SET SERVEROUTPUT ON
DECLARE
numbrows NUMBER (2) := '&numbrows';
name s_dept.name%TYPE;
CURSOR c_emp IS
SELECT last_name,dept_id
FROM s_emp;
TYPE last_dept_table_type IS TABLE OF
c_emp%ROWTYPE
INDEX BY BINARY_INTEGER;
last_dept_table last_dept_table_type;
CURSOR c_dept IS
SELECT name,id
FROM s_dept;
TYPE dept_table_type IS TABLE OF
c_dept%ROWTYPE
INDEX BY BINARY_INTEGER;
dept_table dept_table_type;
BEGIN
OPEN c_dept;
OPEN c_emp;
FOR i IN 1..numbrows LOOP
FETCH c_emp INTO last_dept_table(i);
EXIT WHEN c_emp%NOTFOUND;
FETCH c_dept INTO dept_table(i);
EXIT WHEN c_emp%NOTFOUND;
IF last_dept_table(i).dept_id = dept_table(i).id THEN
DBMS_OUPUT.PUT_LINE (last_dept_table(i).last_name||' '||last_dept_table(i).dept_id||' '||dept_table(i).name);
END IF;
END LOOP;
CLOSE c_emp;
CLOSE c_dept;
END;
/

and this is my problem:

Enter value for numbrows: 5
old 3: numbrows NUMBER (2) := '&numbrows
new 3: numbrows NUMBER (2) := '5';
SET SERVEROUTPUT ON
*
ERROR at line 1:
ORA-00922: missing or invalid option

Can anybody help?

1) Are you running this in SQL Plus, or some other tool? SET SERVEROUTPUT ON is a SQL Plus command.

2) If you are using SQL Plus, what version of SQL Plus, e.g.:

SQL*Plus: Release 8.0.5.0.0 - Production on Fri Feb 21 16:47:22 2003

When I run your code I get:

Enter value for numbrows:
old 2: numbrows NUMBER (2) := '&numbrows';
new 2: numbrows NUMBER (2) := '';

Then of course I get lots of errors, as I don't have the right tables. But note that the &numbrows substitution happens on line 2 not 3, which is correct because SET SERVEROUTPUT ON is not part of the PL/SQL being run.

I am running this in SQL Plus oracle 9i
Do you know why I am getting this error?

No, I don't. As I said, I DON'T get the error when I run the same script in SQL Plus 8.0.5.0.0

NOTE: I'm talking about the SQL PLUS version here, not the Oracle version. I mean the very top banner:

Try leaving a blank line between the SET SERVEROUTPUT ON command and the DECLARE. At the moment your SQL Plus seems to think the SET command is an invalid part of the PL/SQL block, whereas my version manages to recognise it as a separate SET command.

Sorry about that :
Release 9.2.0.1.0 - Production on Fri Feb 21 12:53:24 2003

(c) 1982, 2002, Oracle Corporation. All rights reserved.

I tried leaving a blank line and now i get the following msg:
Enter value for numbrows: 5
old 2: numbrows NUMBER (2) := '&numbrows';
new 2: numbrows NUMBER (2) := '5';
DBMS_OUPUT.PUT_LINE (last_dept_table(i).last_name||' '||last_dept_table(i).dept_id||' '||dept_
*
ERROR at line 27:
ORA-06550: line 27, column 7:
PLS-00201: identifier 'DBMS_OUPUT.PUT_LINE' must be declared
ORA-06550: line 27, column 7:
PL/SQL: Statement ignored

Yes, well DBMS_OUPUT is a typo, isn't it!