The Sql interfaces have their problems, but by-and-all it's about as high level as such interfaces can get while still leaving the formatting of the sql queries to the user. I think it's enough to make it appropriate for them to take care of encodings whenever it can be done, and in the case of SQLite there's clearly enough of a UTF8 policy.
So I agree with Nilssons choice to make UTF8 conversions implicitly. A flag is motivated, but doing conversions should be the default, I think.