According to this, SQL Server 2K5 uses UCS-2 internally. It can store UTF-16 data in UCS-2 (with appropriate data types, nchar etc), however if there is a supplementary character this is stored as 2 UCS-2 characters.
This brings the obvious issues with the string functions, namely that what is one character is treated as 2 by SQL Server.
I am somewhat surprised that SQL Server is basically only able to handle UCS-2, and even more so that this is not fixed in SQL 2K8. I do appreciate that some of these characters may not be all that common.
Aside from the functions suggested in the article, any suggestions on best approach for dealing with the (broken) string functions and UTF-16 data in SQL Server 2K5.