This is a known issue that was fixed in pyodbc 2.1.8:
https://code.google.com/p/pyodbc/issues/detail?id=78&can=1&q=UTF-16
Unfortunately for Ubuntu LTS users the version available for Precise Pangolin is 2.1.7 where this is issue still shows itself. If you want to stick with LTS I've backported pyodbc 3.0.6 - you can find it here: