The short answer is that TeX doesn't know how to deal with UTF-8 (or rather non-ASCII) characters. XeTeX has been designed to work around these limitations. The easiest way to generate PDFs is to install Xe(La)TeX and use the 'xedemo' templates - these templates have been 'ported' from LaTeX to XeLaTeX.
Distribution specific install instructions listed below.
Debian / Ubuntu
Install texlive-xetex that includes xelatex