oh id didnt know that..i was always under the impression that they helped with water retention.. i guess wood chips may be bad but i wouldnt use those anyway. the PH would be fudged by cedar mulch, and it made from bark mostly not the wood itself
Mulch reduces the need to water by reducing the rate of evaporation of moisture from the soil. Mulch can also absorb water so that the water retention per square foot is much greater with mulch than without. This means there is a more consistent supply of water to your plants with mulch than without.

Depending on your type of landscaping and your climate, mulching can drastically reduce or eliminate the need for watering. Of course, when you do water your properly mulched plants, you want to make sure you get the water to the plant and not just to the top layer of the mulch. You can do this buy burying a soaker hose in your mulch, or brushing aside the mulch close to your plants so that the water soaks directly into the surrounding soil.

For water retention mixed hardwood mulch, hay/straw, peat moss, and vermiculite are good choices.
google search benifits of mulch..
hope this helps
-J