Is it bad sorting in UTF ??

Why PG sort's my data in case insensitive manner?

masterdb=# SELECT name FROM enterprises ORDER BY name;
name
--------------------------------------
................
abc
AKS 514
aks518
AKSFree11111
..........................

The worst (totally mess) example is:

masterdb=# SELECT name, replace(name, ' ', '<20>') FROM enterprises
ORDER BY name;
name | replace
--------------------------------------
+--------------------------------------------------------
...............................
alinatestfree | alinatestfree
Alina Test Free | Alina<20>Test<20>Free
alinatestfree220 | alinatestfree220
...............................

More info here:

masterdb=# select version();
version
----------------------------------------------------------------------------------------------------------
PostgreSQL 8.3.7 on x86_64-redhat-linux-gnu, compiled by GCC gcc
(GCC) 4.1.2 20070925 (Red Hat 4.1.2-27)
(1 row)

masterdb=# select name, setting from pg_settings WHERE name ilike 'lc
%';
name | setting
-------------+-------------
lc_collate | en_US.UTF-8
lc_ctype | en_US.UTF-8
lc_messages | en_US.UTF-8
lc_monetary | en_US.UTF-8
lc_numeric | en_US.UTF-8
lc_time | en_US.UTF-8
(6 rows)

masterdb=# \l
List of databases
Name | Owner | Encoding
------------------------------------+----------+----------
masterdb | postgres | UTF8
...............

masterdb=# \d+ enterprises
Table "public.enterprises"
Column | Type | Modifiers |
Description
--------------------+--------------------------+-----------
+-------------
...............
name | text | |
...................

masterdb=# EXPLAIN ANALYZE SELECT name FROM enterprises ORDER BY name;
QUERY PLAN
-----------------------------------------------------------------------------------------------------------------
Sort (cost=29.62..30.68 rows=422 width=11) (actual time=1.537..1.596
rows=367 loops=1)
Sort Key: name
Sort Method: quicksort Memory: 44kB
-> Seq Scan on enterprises (cost=0.00..11.22 rows=422 width=11)
(actual time=0.012..0.181 rows=367 loops=1)
Total runtime: 1.677 ms
(5 rows)