sorting order

I have worked with a lot of different DBMSs. Ranging from MSSQL over Sybase
SQL-anywhere to Interbase and most recently MySQL. With only the last mentioned
has there been no problem that my language is Swedish and that I therefore want
to use our own language's characters in correct sort order. MySQL gives a very
pleasant experience when it comes to character sets, collation orders and all
the rest; you don't have to care about it at all. That is perhaps because it is
a swedish product (of Sweden and Finland).
When I now start trying postgresql all the troubles with character sets come
back. I've changed LANG to sv_SE and LC_COLLATE too, (in sysconfig/i18n and
restarted) created the database with encoding LATIN1, but nothing helps.
I can sort an ordinary textfile with cat textfile | sort. That sorts correctly
so the collation must be correct, then why can't postgresql sort it correctly?