database.yml encoding is utf8, yet connections aren't

$ cat config/database.yml
common: &common
  adapter: mysql
  username: whaaaaaaaaa!
  host: 127.0.0.1
  encoding: utf8

development:
  database: delivery_log_dev
  <<: *common

$ ./script/console
Loading development environment (Rails 2.1.0)

Delivery.connection.charset

=> "latin1"

Why is the encoding not set correctly?
Thanks!