Possible bug with permissions. (Table A has select , insert, update rights but has a reference to a second table that only has select rights)

I think I have found a bug with Postgres' permissions. I have combed
through the documentation, but I haven't been able to find an explanation
for the following problem.

First of all here is what I am running.
Postgress version 7.0.2 ,
OS Linux Red Hat 6.2
Kernel version 2.2.17

I have the following SQL statements to create three tables in a database
that I have previously created.

INSERT INTO pg_group (groname, grosysid, grolist) values
('confUser',100,'{}');

ALTER GROUP "confUser" Add User "conf-user";

CREATE TABLE Object_Type ( # Create the Object_Type table.
Primary_Key serial ,
PRIMARY KEY (Primary_Key),
Name char (20) NOT NULL
)
;

GRANT select ON Object_Type TO GROUP "confUser";

CREATE TABLE Objects (
Primary_Key serial,
PRIMARY KEY (Primary_Key),
Object_Type_Index int,
FOREIGN KEY (Object_Type_Index) REFERENCES Object_Type
ON DELETE CASCADE,
Object_Instance int ,
Name char (50) NOT NULL,
Tag char (50),
UNIQUE (Name,Object_Type_Index)
)
;

GRANT select ON Objects TO GROUP "confUser";

CREATE TABLE Contact (
Primary_Key serial ,
PRIMARY KEY (Primary_Key),
User_Index int,
Greeting_Index int REFERENCES Objects,
First_Name char (12) ,
Last_Name char (12) ,
Company_Name char (30) ,
Title char (30) ,
Company_Type int REFERENCES Objects,
Assistant_Name char (30) ,
On_Comments varchar (512) ,
Off_Comments varchar (512) ,
Not_Current CHAR DEFAULT 0 NOT NULL
)
;

GRANT select, insert, update ON Contact TO GROUP "confUser";

Here is the problem. If I try to insert a contact record as, "confUser."
"psql" and my DBI driver for perl fails with a permission error on objects.
If I give confUser permissions to write to the objects table the statement
will execute.

Here is a copy of the statement while logged on as conf-user and without
write privleges on objects,"

idg-wendel=> insert into contact (user_index, greeting_index, first_name,
last_
name, company_name, title, company_type) values (1, 3, 'Wendel', 'Leibe',
'Team
', 'Software Engineer', 3);
ERROR: objects: Permission denied.
idg-wendel=>

BTW the objects table has more than 250 entries inside of it. In other
words, I am giving a valid primary_key for the references in the contact
table in both cases so I don't know why it is failing.

Is this a known bug or am I doing something wrong?

Thanks,
Wendel Leibe

Software Engineer
Austin, Texas