Then this might be related to the encoding used in your database, too. Which encoding does that use? Mine uses the default setting "latin1_swedish_ci", but I just entered the characters in question to test it. Do they work if you enter then freshly?
I had German öüä before 1.1.6 still work, but I encountered similar things before, too.
Lots of different places to look...These encoding things are not the easiest....I have no idea why this happens suddenly.
(BTW, I believe utf8 has been the default character set before.)