upper and lower doesn't work with german umlaut?

hello, what is wrong?

postgresql 7.1.3
suse linux 7.1

configure postgresql:
./configure --prefix=$DIR_DEST --exec-prefix=$DIR_DEST
--enable-local --enable-multibyte
--enable-odbc --enable-syslog --with-java

init database:
$DIR_DEST/bin/initdb --pgdata=$DIR_DB01 --encoding=LATIN1

check LANG-variable:
postgres(at)server:/app/pgsql/bin > echo $LANG
de_DE

and that's the result:

my_db=# select lower('ÄäÜüÖöß');
lower
---------
ÄäÜüÖöß
(1 row)

uppercase umlauts are not converted.

thanks
frank