Gregory, who bossed Villa from 1998-2002, said: "Even though Gareth began his career as a defender I always thought he had the potential to develop into a midfield player.
"I still think he has the ability to slip back into the back four because there's a bit of Bobby Moore about him.
"Bobby wasn't the quickest but I can see Gareth ending up in the back four again."
Gregory said: "I spoke to Gareth a few weeks ago and I could see he was in the same situation as Yorkie.
"Dwight just got the chance to go and play on the biggest stage in the land. It's the same reason Gareth wants to join Liverpool - the chance to win a cabinet-full of medals."