possible bug with group by?

Is this a bug or am I just misunderstanding something?

playpen=> create table tablea ( a int,b int , c int );
CREATE
playpen=> insert into tablea(a, b) values (1 ,2);
INSERT 28299 1
playpen=> insert into tablea(a, b, c) values (2 ,3, 4);
INSERT 28300 1
playpen=> select a, b, case when c is null then 'not set' else 'set' end
as z from tablea;
a|b|z
-+-+-------
1|2|not set
2|3|set
(2 rows)


playpen=> select a, b, case when c is null then 'not set' else 'set' end
as z from tablea group by a, b, z;
ERROR:  Unable to identify an operator '<' for types 'unknown' and
'unknown'       You will have to retype this query using an explicit cast
playpen=>