As chip said, that would update the table directly, however, what you're suggesting isn't the same as:

update users set name = replace(name,'Cunt','Chip') which would update all occurrences of Cunt in the name column regardless of its contents (rows where name is 'My name is Cunt', 'I am a Cunt', etc...)

TRANSLATE is also a very useful function if you want to replace single characters with others