I recently was setting up a new VPS on Linode and I got the following error when trying to create a new database:

ERROR: new encoding (UTF8) is incompatible with the encoding of the template database (SQL_ASCII) 
HINT: Use the same encoding as in the template database, or use template0 as template.

This error is related to the locale of the system when Postgres was installed. If you run the commands in my previous post before installing Postgres, you should avoid these errors altogether.

If Postgres has already been installed, however, you can run the following commands (assuming Postgres version 8.4) to reinitialise the database with the correct encoding:

pg_dropcluster --stop 8.4 main
pg_createcluster --start -e UTF-8 8.4 main

Note: this will erase all databases and reset your postgres configuration so it is only really useful when you are first setting up your database, or have taken appropriate measures to be able to restore your data.

Have you ever gotten error messages such as the following when running commands such as apt-get?

perl: warning: Setting locale failed.
perl: warning: Please check that your locale settings:
	LANGUAGE = (unset),
	LC_ALL = (unset),
	LC_CTYPE = "en_US.UTF-8",
	LANG = (unset)
    are supported and installed on your system.

I’ve had this problem quite a lot on my VPS boxes on Linode and SliceHost. The solution is simple, simply run the following:

locale-gen en_US.UTF-8
update-locale LANG=en_US.UTF-8