To save space with UTF-8, use
VARCHAR instead of CHAR. Otherwise,
MySQL must reserve three bytes for
each character in a CHAR CHARACTER SET
utf8 column because that is the
maximum possible length. For example,
MySQL must reserve 30 bytes for a
CHAR(10) CHARACTER SET utf8 column.
This answer showed up at the top of my google search results but wasn't correct.
The confusion is probably due to different versions of MySQL being tested.
Version 4 counts bytes
Version 5 counts characters
Here is the quote from the official MySQL 5 documentation:
MySQL interprets length specifications in character column definitions in character units. (Before MySQL 4.1, column lengths were interpreted in bytes.) This applies to CHAR, VARCHAR, and the TEXT types.
Interestingly (I hadn't thought about it) the max length of a varchar column is affected by utf8 as follows:
The effective maximum length of a VARCHAR in MySQL 5.0.3 and later is subject to the maximum row size (65,535 bytes, which is shared among all columns) and the character set used. For example, utf8 characters can require up to three bytes per character, so a VARCHAR column that uses the utf8 character set can be declared to be a maximum of 21,844 characters.
It is better to use "char" for high-frequent update tables because the total data length of the row will be fixed and fast. Varchar columns make row data sizes dynamic. That's not good for MyISAM, but I don't know about InnoDB and others. For example, if you have a very narrow "type" column, it may be better to use char(2) with latin1 charset to only claim minimal space.
If you connect to the database using latin1 encoding (for example with PHP) to save an PHP UTF8 string in an MySQL UTF8 column, you will have a double UTF8 encoding.
If the UTF8 string $s is 32 characters long but 64 bytes long and the column is VARCHAR(32) UTF8, the double encoding will convert the string $s to a 64 characters long UTF8 string that will be truncated in the database to its 32 first characters corresponding to the 32 first bytes of $s. You may end up thinking that MySQL 5 behaves like MySQL 4 but it is in fact a second cause for the same effect.