The following bug has been logged online:

Bug reference: 1818
Logged by: Josef Springer
Email address: Josef.Springer (AT) joops (DOT) com
PostgreSQL version: 8.0.3
Operating system: Win2k
Description: ODBC: Wrong encoding when reading string coumns
Details:

Database encoding: UNICODE
Client encoding: UNICODDE
Database is used via ODBC.
Transporting via ODBC:
Writing string columns content is encoded UNICODE (UTF8).
Readed string columns are not encoded as UNICODE (UTF8). One byte per
character is transported

---------------------------(end of broadcast)---------------------------
TIP 3: Have you checked our extensive FAQ?

http://www.postgresql.org/docs/faq

Database encoding UNICODE is not fully supported on win32, see the FAQ.
We hope to have this fixed for 8.1, but in 8.0 you'll need to pick a
different encoding.

//Magnus

---------------------------(end of broadcast)---------------------------
TIP 6: explain analyze is your friend