As seen on the screenshot below, Confluence 5.x welcome content does not work properly when using the bundled German language pack:

All encoding settings are correct and umlaut characters display correctly in an later-entered content.

As one of our customers pointed out, the problem is having \UFFD string in the place of "ö" and "ü" characters. Normallz these should be:

\u00f6 ö
\u00fc ü

The problem is described on the following wiki page: http://en.wikipedia.org/wiki/Specials_(Unicode_block)#Replacement_character