Python/Django Writes u'' String To Postgresql (with UTF8 DB) and Munges Entry

I'm sure that I've misconfigured something here, but I can't see what it is.

In Django, I've got a model field that says this:

short_url_slug = AutoSlugField(slugify=short_url_slugify, populate_from=id, blank=False, unique=True)

South creates a migration (seemingly) correctly:

'short_url_slug': ('autoslug.fields.AutoSlugField', [], {'unique_with': '()', 'max_length': '50', 'populate_from': 'None', 'blank': 'True'}),

My Postgresql DB is UTF8:

\l

(MyDBName)                      | (username) | UTF8     | en_US.UTF-8 | en_US.UTF-8 | 

And I have a real life unicode character:

u'\xa4'

But when I write this to the DB, and try to read it out, I get:

In [3]: this_instance.short_url_slug
Out[3]: u'o'

Thoughts? My suspicion is that Postgresql needs to have a different character encoding, but I'm not sure what it should be (if so) or how to do it.

Edit With Additional Info

SELECT version(), current_setting('standard_conforming_strings') AS scs;

PostgreSQL 9.2.4 on x86_64-apple-darwin11.4.2, compiled by i686-apple-darwin11-llvm-gcc-4.2 (GCC) 4.2.1 (Based on Apple Inc. build 5658) (LLVM build 2336.9.00), 64-bit | on

(END) 

Python Version:

Python 2.7.2 (default, Oct 11 2012, 20:14:37)

Django Version:

In [2]: django.VERSION
Out[2]: (1, 5, 1, 'final', 0)

psycopg2:

$ pip freeze | grep psycopg2
psycopg2==2.5

Raw log from postgresql:

LOG:  statement: UPDATE [...lots of stuff removed...] "short_url_slug" = 'o' [... rest of the stuff ...]

So, it looks like it's not even getting to Postgresql. But when I break at the line in the insertion, the variable definitely has the unicode value.

(Pdb) response.short_url_slug
u'\xd6'

(this is after assignment in Python, but before response.save())

More Output:

The way that I am detecting that the unicode is getting munged is that the database uniqueness constraint is getting violated. This can be tested on outputting this content into models (with the constraint off):

In [11]: all = Response.objects.all()

In [12]: all[0].short_url_slug
Out[12]: u'o'

In [13]: all[4].short_url_slug
Out[13]: u'o'

In [14]: all[4].short_url_slug == all[0].short_url_slug
Out[14]: True