Two things to check - did you create the database -E UNICODE? there's some simple psql command to check. And, is the AOLserver running utf-8? Dunno if the second one matters.
The database runs in UNICODE and the AOLserver has the OuputCharset as well as URLCharset set to utf-8.
This is only a problem with the file-names of uploaded files. Everything else works fine, all content is stored correctly and switching to arabic as the locale works fine as well.