What should be used and when ? or is it always better to use UTF-8 always? or ISO-8859-1 still has importance in specific conditions?
Is Character-set related to geo
Unicode is taking over and has already surpassed all others. I suggest you hop on the train right now.
Note that there are several flavors of unicode. Joel Spolsky gives an overview.
(Graph current as of Feb. 2012, see comment below for more exact values.)