To maintain compatibility between PHP4 and PHP5 you should always pass a string argument to this function. PHP4 autodetects the format of the input if you leave it out whereas PHP5 will assume the format to be ISO-8859-1 (and choke on the byte order marker of UTF-8 files).
Calling the function as <?php $res = xml_parser_create('') ?> will cause both versions of PHP to autodetect the format.