Is XML case-sensitive?

Short Answer:

Yes - XML is case sensitive.

Longer Answer:

It is widely accepted as case sensitive, however if you want to accept more flexibly, take a look at the question below, which discusses having case-insensitive enumerations:

XML Schema Case Insensitive Enumeration of Simple Type String

With XSD 1.1 you can achieve a case-insensitive enumeration using an assertion:

<xs:simpleType name="RGB">
  <xs:restriction base="xs:string">
    <xs:assert test="lower-case($value) = ('red', 'green', 'blue')"/>
  </xs:restriction>
</xs:simpleType>

XSD 1.1 is supported in recent releases of Saxon and Xerces.