On this Oracle page Java HotSpot VM Options, it lists -XX:+UseCompressedStrings as being available and on by default. However in Java 6 update 29, it is off by
Java 9 executes the sorting lines of an enormous file.txt in java twice as fast on my machine as Java 6 and also only needs 1G of memory as it has -XX:+CompactStrings enabled by default. Also, in Java 6, the compressed strings only worked for 7-bit ASCII characters, whereas in Java 9, it supports Latin1 (ISO-8859-1). Some operations like charAt(idx) might be slightly slower though. With the new design, they could also support other encodings in future.
I wrote a newsletter about this on The Java Specialists' Newsletter.