Marc-André Lemburg:

• Strings are fine for text data that is encoded using the default encoding
• Unicode should be used for all text data that is not or cannot be encoded in the default encoding
• Later on in Py3k, all text data should be stored in Unicode and all binary data in some new binary type.

But this requires the programmer to make sure all libraries are unicode-clean (no explicit testing for isinstance (str), no [c]StringIO, etc.)

Advice from people on planetpython.org who have been there: bite the bullet. (Ian observed that this is where static typing would help.)