The problem is not the lower case utf-8 but the " " put around the utf-8. I have now found other threads with a similar problem. The problem appears to be generated by Glassfish v2 and the solution was to upgrade to Glassfish version 3. See below, the header message (Raw) in SOAP UI now reads for exactly the same App service - note the double quotes have disappeared and everything is working fine:
HTTP/1.1 200 OK
server: grizzly/1.9.18
Content-Type: text/xml;charset=utf-8
Transfer-Encoding: chunked
Date: Tue, 05 Jan 2010 10:27:00 GMT
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http://forums.java.net/jive/thread.jspa?messageID=378774