I have a problem with XeLaTeX. Although German umlauts (äöü) work, "ß" compiles to "SS".
I use TeX Live 2011 on Debian x64.
See this minimal example:
\documentclass{minimal}
\usepackage[T1]{fontenc}
\usepackage[naustrian]{babel}
\begin{document}
Das "`s"' in "`daß"' muß (Achtung, "`muss"' schreibt man normal so) einsam bleiben,
könntest Du auch "`welches"' schreiben.
\end{document}
compiles to
Das „s“ in „daSS“ muSS (Achtung, „muss“ schreibt man normal so) einsam bleiben, könntest Du auch „welches“ schreiben.
(You might think the problem is related to babel, but I tried it without babel as well - babel just makes the quotation marks work right but doesn't harm the "ß").