The bash shell used in the Terminal application can be tweaked a little for better interactive experience, by saving the following lines as .intputrc in your home directory:
via Advanced readline settings for bash in Terminal – Mac OS X Hints.
The behavior of ‘bash’ is changed by more files that .bash_profile. In particular, the ‘readline’ settings are found in .inputrc – bashed my head against the wall for a while on a system that didn’t ignore case on filename completion.
inputrc
completion-ignore-case