Type psql -l to find out the encoding of your pg databases:
tils@tp:~$ psql -l
List of databases
Name | Owner | Encoding
-----------+----------+----------
beta | tils | UNICODE
lari | tils | UNICODE
lari2 | tils | UNICODE
...
If you have something else, for example SQL_ASCII, in there then those are single byte encoded databases. As far as I understand it's in almost any case the right thing to create your database as UNICODE when you want to be able to store data in different encodings.
The error that your maxlength procedure catches indicates that something else is going wrong before, because in that case you would end up storing a single international character (e.g. a german umlaut) as two characters in the db, which leads to lots of other problems. For example a query that selects a substring could split the 2-byte character in two pieces. You should have created your database UNICODE encoded or in the encoding that understands the characters that you need (e.g. LATIN1).
