BUG #4865: replace function returns null

The following bug has been logged online:

Bug reference: 4865
Logged by: Jamolkhon Khakimov
Email address: jkhakimov(at)gmail(dot)com
PostgreSQL version: 8.2.7
Operating system: Linux
Description: replace function returns null
Details:

I dont know if it's a bug or not. It just seems illogical to me.

replace( 'abcdefabcdef', 'cd', 'XX')
// returns 'abXXefabXXef', ok

replace( 'abcdefabcdef', 'XX', 'YY')
// returns 'abcdefabcdef', ok

replace( 'abcdefabcdef', 'XX', null)
// returns null, while it should return 'abcdefabcdef'

Sorry if that's not a bug. Could find anything related to this in the
documentation.