Queries are case-sensitive only if one of the following options: Uppercase words and words with only the first letter capitalized or All words is selected in the Settings page of the Administration Tool (Index > Settings). It determines the type of casing indexed. Indexing casing creates a larger index, but increases the precision of search results. For example, it prevents confusion between the words MOSS (Microsoft Office SharePoint Services) and moss.
See also: Administration Tool Help > How to Modify the Index Settings