It really depends on what the app is supposed to be used for.
Sure, in theory it's great if you allow every script on god's green earth to be used, but if the DB is also used by support staff, are they going to be able to handle names in Japanese, Hebrew and Thai script? Can you printer, if it's used to print postage labels?
You might add an extra field "Latin Transcription", but IMO it's really OK to restrict it to ISO-8859-1 characters - People who don't use Latin characters are by now so used to having to use a transcription that they don't mind it anymore, unless they're hardcore nationalists.
