Host upgraded PHP to 5 now UTF-8 vs Latin1 text encoding issues

[dharma]

My host recently upgraded to PHP 5 from 4. Since then I have been seeing this issue:

Special characters entered by customer :
Kübeckgasse goes into the db as it always has as latin1: K√ºbeckgasse but comes out UTF-8 displayed as: Kübeckgasse.

I have inquiried about this at my host who says that it is a Zen Cart issue.

So far I have not made any changes to my db or ZC files. This new data has appeared in the header of my db since the upgrade:

/*!40101 SET @OLD_CHARACTER_SET_CLIENT=@@CHARACTER_SET_CLIENT */;
/*!40101 SET @OLD_CHARACTER_SET_RESULTS=@@CHARACTER_SET_RESULTS */;
/*!40101 SET @OLD_COLLATION_CONNECTION=@@COLLATION_CONNECTION */;
/*!40101 SET NAMES utf8 */;

which my host says is the way MySQL v5 client libraries dumps data vs. the old way MySQL 4 did (without the code above)


My site is running on:
Apache 1.3.41
PHP 5.2.6 linked against the MySQL 5.0.54 libraries
MySQL 4.0.27 database engine

They say they recently linked the PHP 5 to MySQL 5.0.54 libraries, not sure what that means but is this my issue?

My goal would be to fix what ever this issue is and then move my db onto their MySQL 5.0.44 server.

Do I need to change some ZC code to clear this up? Like change the CHARSET from western to UTF-8 for browsers? or will mess things up on later upgrades?