BUG #8441: Recursive function in plpgsql does not seem to handle null values correctly

The following bug has been logged on the website:

Bug reference: 8441
Logged by: Tom van Ees
Email address: tvees(at)davincigroep(dot)nl
PostgreSQL version: 9.0.4
Operating system: Windows Server 2008 R2
Description:

The Levenshtein function can only handle strings with length 255 or less.
I needed a Levenshtein function that could handle longer strings.
Therefore I wrote the following udf:

CREATE OR REPLACE FUNCTION longlevenshtein (string1 character varying
(1000000), string2 character varying (1000000)) RETURNS integer AS $$
BEGIN
IF (length(coalesce($1, '')) = 0 AND length(coalesce($2, '')) = 0) THEN
RETURN 0;
ELSEIF ($1 IS NULL and $2 IS NOT NULL and length($2) > 0) THEN
RETURN length($2);
ELSEIF ($2 IS NULL and $1 IS NOT NULL and length($1)> 0) THEN
RETURN length($1);
ELSEIF length($1) = 0 AND length(coalesce($2, '')) > 0 THEN
RETURN length(coalesce($2, ''));
ELSEIF length($1) > 0 AND (length($2) = 0 or $2 is null) THEN
RETURN length(coalesce($1, ''));
ELSE
RETURN (Levenshtein(SUBSTRING($1 FROM 1 FOR 254), SUBSTRING($2 FROM 1
for 254)) + longlevenshtein(coalesce(SUBSTRING($1 FROM 255), ''),
coalesce(SUBSTRING($2 FROM 255), '')));
END IF;
END;
$$ LANGUAGE plpgsql;

When I invoke this function with
SELECT longlevenshtein(null, 'foobar')
I get a ERROR: stack depth limit exceeded
while I expected the return value 6