case / coalesce problem with strings

select 'hello ' || coalesce('there','there');
ERROR:  Function 'text(unknown)' does not exist
        Unable to identify a function that satisfies the given argument
types
        You may need to add explicit typecasts

It seems clear that the coalesce construction must return a string - so why
does this fail?

The followinfg works just fine:


-Dino