Fra MySQL-reference
Så din kode skal være
mysql_init(&mysql);
mysql_options(&mysql, MYSQL_SET_CHARSET_NAME, "utf8");
mysql_options(&mysql, MYSQL_INIT_COMMAND, "SET NAMES utf8");
mysql_real_connect(&mysql,CTH_SERVER,CTH_USER,CTH_PASSWORD,CTH_DB_IN,0,0,0));