In perl 5.8.* you can also use Encode, which provides encoding/decoding methods. You can also have a look at Converting character encodings for additional ways of doing this (the regexp method might not work with recent versions of perl and/or XML::Parser.
XML::Twig also lets you work in the original encoding for the document, by using the keep_encoding option.
Finally, if there is any way for you to work in UTF-8, it is probably a good idea. Note that most Web browsers, data bases and mail agents now support it, most editors and terminals too, not to mention perl 5.8.*