-In nano version 0.9.20, the default is to have a completely consistent user interface across all user input functions. This means that regardless of whether you're being asked for a filename to insert or write, or a string to search for, the previous value is already inserted before the cursor. If you prefer the old behavior, use the Pico emulation mode (-p or --pico) or just hit Meta-P while in nano (see the ^G help text for more details).
It was decided that consistency was nice, but people are used to Pico's inconsistent behavior. Also, in version 1.1.99pre1, search and replace history was introduced. If you wish to edit your previous search/replace entry (or any previous entry), you can do so by hitting the up arrow to cycle through your history. This method allows the best of both worlds: You don't need to erase the previous string if you want to enter a new one, but you can with one keystroke recall previous entries for editing. Therefore there is now no "Pico mode", nano is and has always been a Pico clone, and clones by default should be compatible.
You need to make nano your $EDITOR. If you want this to be saved, you should put a line like this in your .bashrc if you use bash (or .zshrc if you believe in zsh):