In a web based application written using perl there is a facility to create user. So should it allow the application user to enter user name as "/dev/null"

If you're talking about a user of the system, then no. / is not a valid character in a UNIX username as far as I'm aware.

I wouldn't expect a web-based application to work like that. It's almost certainly going to be running as user nobody, who should not have permissions to create new system users.

Are you sure it's not just creating a database of “usernames” internal to the app? In which case, it would depend entirely on the app, and how the username is used. If it's creating a file with the username, then you really don't want let it contain a / as that could put the file into a different directory — somewhat of an administrative nightmare.

To err on the safe side, I say “no”. But without seeing the app, or knowing how the entered string is used, I can't be sure.

Edit: If you're creating a file based on the username then this is fine so long as / is escaped to something else in the filename. You can't just use C-style backslash-escaping as / cannot occur in a *NIX filename at all (although \ itself can, so you could do something by replacing / with \ )