Is it considered as a good practice to pick Unicode string over regular string when coding in Python? I mainly work on the Windows platform, where most of the string types are Unicode these days (i.e. .NET String, '_UNICODE' turned on by default on a new c++ project, etc ). Therefore, I tend to think that the case where non-Unicode string objects are used is a sort of rare case.  Anyway, I'm curious about what Python practitioners do in real-world projects.
Yes, use unicode. 
Some hints:

When doing input output in any sort of binary format, decode directly after reading and encode directly before writing, so that you never need to mix strings and unicode. Because mixing that tends to lead to UnicodeEncodeDecodeErrors sooner or later.
[Forget about this one, my explanations just made it even more confusing. It's only an issue when porting to Python 3, you can care about it then.]
Common Python newbie errors with Unicode (not saying you are a newbie, but this may be read by newbies): Don't confuse encode and decode. Remember, UTF-8 is an ENcoding, so you ENcode Unicode to UTF-8 and DEcode from it.
Do not fall into the temptation of setting the default encoding in Python (by setdefaultencoding in sitecustomize.py or similar) to whatever you use most. That is just going to give you problems if you reinstall or move to another computer or suddenly need to use another encoding. Be explicit.
Remember, not all of Python 2s standard library accepts unicode. If you feed a method unicode and it doesn't work, but it should, try feeding it ascii and see. Examples: urllib.urlopen(), which fails with unhelpful errors if you give it a unicode object instead of a string.

Hm. That's all I can think of now!
Should I use Unicode string by default?