Encoding woes

Hello!
I am having a few encoding related problems.

1. I have a database set up on my Mac OSX machine, PostgreSQL 8.02. I
am trying to dump the tables and load them into Postgres on a Suse 9.2
box. I get the following error:
ERROR:  invalid byte sequence for encoding "UNICODE": 0xe5742c

I have tried to set the client encoding to utf-8 on both machines, but
it does not seem to help. It works fine with LATIN1, but I think I may
need Unicode (see point 2).



2. The system I am setting up will contain a several tables with names
and addresses from many countries (Norway, Spain, Denmark, Sweden
etc.).
   a. Is Unicode the way to go?
   b. Do I need to configure the server in any way, or is this a client
issue?


Any advice would be great!

Thank you