Sorry, I should have thought that the same problem with iso-8859-1 characters would arise in this site.

This is what i meant to write (this time using "á" expressions)

• Now, if i do a select id, test, upper(test) as upper, lower(test) as lower from encoding i get:

  id - test - upper - lower
  --------------------------
  47 áéíóú   áéíóú    ã¡ã©ã­ã³ãº
  

• And i thinks it's not a PostgreSQL issue, because in psql i can do:

  legolasdb=# show client_encoding;
  NOTICE:  Current client encoding is UNICODE
  SHOW VARIABLE
  legolasdb=# insert into zzz_encoding (id, test)
  legolasdb-#     values (nextval('zzz_encoding_id_seq'), 'áéíóú');
  INSERT 184598 1
  legolasdb=# select id, test, upper(test), lower(test) from zzz_encoding;
  id |   test     |   upper    |   lower
  ---+------------+------------+------------
  48 | áéíóú      | ÁÉÍÓÚ      | áéíóú 
  

So the problem is:

• The test string comes OK from the database.
• upper(test) doesn't returns uppercase chars.
• lower(test) returns garbage.
• With psql, everything works fine.