The answer is that the package is available in R (just checked this on my machine).
The particular error message that you are getting is very misleading. It is R's `catch-all' condition for anything that it doesn't understand going wrong during installation. You will get this error if you mis-spelled anything (Plyr instead of plyr) or your network connection is not working, or you are behind a proxy or whatever.
I typically get this problem when I am behind a proxy or I have mis-spelled something. But it can be because of any other number of reasons. I will suggest you make sure you can access the internet from inside R first.
If nothing works, you can always download the package from CRAN using a browser. If you are on Windows, you want the .zip version and if you are on *nix you want the .tar.gz version. (.tgz for Macs?). Then you can install it like so:
setwd("/path/where/I/downloaded/the/compressed/file")
install.packages("plyr", repos=NULL)
See if that works.
