I load some values from database using hibernate and try to send them out in a webservice method result. Although some values go out nice, on others an exception is thrown:

Service invocation threw an exception with message : org.xml.sax.SAXParseException: Invalid byte 2 of 2-byte UTF-8 sequence.

My initial assumption was that the value is somehow incorrect, but the exception also happens after modifying the value in debug via watch. Such strings as "ТЕСТ тест" do not happen to lead to exception, but string "ПЕТЕРБУРГСКИЙ" always leads to it. Actually, even after updating database field, the value of "ИЙ" also leads to exception (the values are in russian).
The value in point contained in an @Entity class, which in turn contained in webservice response wrapper class. The field named 'name' of database type varchar(100) and Java type String. Database uses UTF8 encoding.

Could anyone give some insight on possible roots of the issue?

Software used is NetBeans 6.5, Glassfish v2ur2 and PostgreSQL 8.3.