oma/character encoding issue ruby 1.8.6, rails 2.3.3

## character encoding issue ruby 1.8.6, rails 2.3.3
ruby -v
ruby 1.8.6 (2008-08-11 patchlevel 287) [universal-darwin9.0]
rails -v
Rails 2.3.2
Mac OS X 10.5
(/Library/Ruby/Gems/1.8/gems/mongrel-1.1.5/ is used)

mysql --version
mysql  Ver 14.12 Distrib 5.0.67, for apple-darwin9.0.0b5 (i686) using readline 5.1

database.yml
development:
  adapter: mysql
  encoding: utf8
  reconnect: false
  database: tipsify_development
  pool: 5
  username: root
  password:
  socket: /tmp/mysql.sock

In my layouts/example.html.erb I have
<head>
  <meta http-equiv="content-type" content="text/html;charset=UTF-8" />
  ...

PROBLEM reproducing
controller:
def create
    puts ':inputparam', params[:inputparam]

'øøh' written in a textfield, clicking Create and it will output øhh as √∏hh.  ?? This will also be stored in the database.
	ruby -v
	ruby 1.8.6 (2008-08-11 patchlevel 287) [universal-darwin9.0]
	rails -v
	Rails 2.3.2
	Mac OS X 10.5
	(/Library/Ruby/Gems/1.8/gems/mongrel-1.1.5/ is used)

	mysql --version
	mysql Ver 14.12 Distrib 5.0.67, for apple-darwin9.0.0b5 (i686) using readline 5.1

	database.yml
	development:
	adapter: mysql
	encoding: utf8
	reconnect: false
	database: tipsify_development
	pool: 5
	username: root
	password:
	socket: /tmp/mysql.sock

	In my layouts/example.html.erb I have
	<head>
	<meta http-equiv="content-type" content="text/html;charset=UTF-8" />
	...

	PROBLEM reproducing
	controller:
	def create
	puts ':inputparam', params[:inputparam]

	'øøh' written in a textfield, clicking Create and it will output øhh as √∏hh. ?? This will also be stored in the database.