The reason why your having trouble with space is not to do with the code that is changing the letter, but the method that you accept input.
cin only accepts 1 word upto a space character, so instead you should implement something like this
char Vs[200];
cin.getline(Vs, 200);
EDIT: this is perhaps the better way
string Vs;
getline(cin, Vs);
im really not thinking straight tonight
getline()
Chris