Thanks a lot to Hassan, I have finally sorted this problem out properly. 
There were a few more steps:

1. I had to make sure that the right values for utf8 were set in my.cnf. 
Looking for the right set of values I found the following:

[mysqld]
init_connect=’SET collation_connection = utf8_general_ci’
init_connect=’SET NAMES utf8′
default-character-set=utf8
character-set-server=utf8
collation-server=utf8_general_ci
skip-character-set-client-handshake


2. I learned that once created, each database, table, and column has a 
charset assigned. And these were not automatically changed with the 
change to my.cnf. To complete the fix, I would either have to do:

alter database db_name charset=utf8;
alter table t_name charset=utf8;
AND a similar alter for the columns.

Instead I just dropped everything and recreated the databases (which 
then picked up the new charset) and it worked, finally. Wow, that was an 
interesting bit of setup!

Thanks to all for the help.
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