Facebook does sort of the same thing: http://www.zdnet.com/blog/facebook/facebook-passwords-are-no... Yes, it's possibly less secure. But for both Facebook and all of the Blizzard games there are other options if you are concerned.
If your password is aBc, you can log in to Facebook using aBc (original), AbC (windows caps lock), and ABc (first cap) only. For a regular password, this is just slightly less secure.
Being case insensitive entirely is quite a bit less secure (abc, abC, aBc, aBC, Abc, AbC, ABc, ABC).