PHP can handle unicode fine once you make sure to encode and decode on entry and exit. If you are storing in a database, ensure that the language encodings and charset mappings match up between the html pages, web server, your editor, and the database.
If the whole application uses UTF-8 everywhere, decoding is not necessary. The only time you need to decode is when you are outputting data in another charset that isn't on the web. When outputting html, you can use
htmlentities($var, ENT_QUOTES, 'UTF-8');
to get the correct output. The standard function will destroy the string in most cases. Same goes for mail functions too.
http://developer.loftdigital.com/blog/php-utf-8-cheatsheet is a very good resource for working in UTF-8