String update problem

To all,

I was working with a String parameter which would be altered during
various method calls; an example code as belows:

public class BlockMatchSimulation
{
    class InnerBlock
    {
        public String mName;
    }

    public void replaceString (String pName, String pDelim, String
pNewValue)
    {
        pName=pName.replaceAll (pDelim, pNewValue);
    }

    public void appendString (String pName, String pSurName)
    {
        pName=pName+" "+pSurName;
    }

    public void replaceString (InnerBlock pObj, String pDelim, String
pNewValue)
    {
        pObj.mName=pObj.mName.replaceAll (pDelim, pNewValue);
    }

    public void appendString (InnerBlock pObj, String pSurName)
    {
        pObj.mName=pObj.mName+" "+pSurName;
    }

    public static void main (String[] pArgs)
    {
        String aName="Joseph";
        BlockMatchSimulation aObj=new BlockMatchSimulation ();
        BlockMatchSimulation.InnerBlock aIObj=aObj.new InnerBlock ();
        aIObj.mName=aName;

        // direct string handling
        aObj.replaceString (aName, "ep", "");
        aObj.appendString (aName, "House");
        System.out.println ("Name is : "+aName);

        // object level handling
        aObj.replaceString (aIObj, "ep", "");
        aObj.appendString (aIObj, "House");
        System.out.println ("Name in the Object : "+aIObj.mName);
    }
}

the output is :
Name is : Joseph
Name in the Object : Josh House

I was wondering why if I use the String parameter directly and called
the replaceString and appendString --> the updated value is not
returned!

On the other hand, it works perfectly when I encapsulate the String
field within an object.... why is it so?

As I remember String in java is handled by the JVM in a different way
(ie. String/literal pooling); is this the reason for such strange
behaviour?