If you are really interested, get technical here:
http://www.webmasterworld.com/forum21/11176.htm
Short answer - UTF-8 is... better.... but... it depends on what you are doing. It gets more important if you work with funny symbols from funny languages.
Just use:
Language: HTML
<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd">
<html xmlns="http://www.w3.org/1999/xhtml">
<head>
<meta http-equiv="Content-Type" content="text/html; charset=utf-8" />
<title>Untitled Document</title>
</head>