I vote for UTF-8. I had troubles with 1.4 version since I convert manually everything to UTF-8.
Characters in ISO-8859-2 was wrong displayed in all emails. This is (I think) because there is used php function html_entity_encode/decode. That function supports very limited amount of character sets.
Everyone, who has unsuported character set will have trouble. ISO-8859-2 is unfortunately unsuported.
There are 2 ways how to solve it. Rewrite that functions or switch to UTF-8.
I don't see any problems in my UTF version, but I must say that I use limited functionality right now.
Only email and calendar.