BUG #5027: SQL query error?

The following bug has been logged online:

Bug reference:      5027
Logged by:          Dmitry
Email address:      master@hsdesign.ru
PostgreSQL version: 8.3.5
Operating system:   ALT Linux
Description:        SQL query error?
Details:

Hello,

I try to make user rating by this query:

"BEGIN;
ALTER SEQUENCE service.rate_seq RESTART 1;
UPDATE service.user u
   SET rate = sr.rate
FROM (
   SELECT user_id, nextval('service.rate_seq') as rate
   FROM
     (
      SELECT user_id, score FROM service.user
      ORDER BY score DESC
     ) a
   ) sr
WHERE u.user_id = sr.user_id;
END;"

all work fine, but if while this query is executing another process do
"UPDATE service.user SET score=score+1" i get wrong sequence value; for
example
if user count = 55000 i can get 512321 in sequence ;(
why? query error?