This seriously cripples any search capabilities.
Consider:
http://api.stackapps.com/0.8/search?intitle=soapi&order=desc&sort=activity vs
http://api.stackapps.com/0.8/search?intitle=Soapi&order=desc&sort=activity vs
http://api.stackapps.com/0.8/search?intitle=SOAPI&order=desc&sort=activity
This also begs the question "How many other textual parameters are case sensitive?"
it is my opinion that there should be no case sensitivity anywhere in the API.