Don't put NULL inside quotes in your update statement. This should work:

UPDATE table SET field = NULL WHERE something = something

No special syntax:

CREATE TABLE your_table (some_id int, your_column varchar(100));

INSERT INTO your_table VALUES (1, 'Hello');

UPDATE your_table
SET    your_column = NULL
WHERE  some_id = 1;

SELECT * FROM your_table WHERE your_column IS NULL;
+---------+-------------+
| some_id | your_column |
+---------+-------------+
|       1 | NULL        |
+---------+-------------+
1 row in set (0.00 sec)

This is one example where using prepared statements really saves you some trouble.

In MySQL, in order to insert a null value, you must specify it at INSERT time or leave the field out which requires additional branching:

INSERT INTO table2 (f1, f2)
  VALUES ('String Value', NULL);

However, if you want to insert a value in that field, you must now branch your code to add the single quotes:

INSERT INTO table2 (f1, f2)
  VALUES ('String Value', 'String Value');

Prepared statements automatically do that for you. They know the difference between string(0) "" and null and write your query appropriately:

$stmt = $mysqli->prepare("INSERT INTO table2 (f1, f2) VALUES (?, ?)");
$stmt->bind_param('ss', $field1, $field2);

$field1 = "String Value";
$field2 = null;

$stmt->execute();

It escapes your fields for you, makes sure that you don't forget to bind a parameter. There is no reason to stay with the mysql extension. Use mysqli and it's prepared statements instead. You'll save yourself a world of pain.