The example code of how to read Unicode given at http://docs.python.org/library/csv.html#examples looks to be obsolete, as it doesn't work with Python 2.6 and 2.7.
Here follows UnicodeDictReader which works with utf-8 and may be with other encodings, but I only tested it on utf-8 inputs.
The idea in short is to decode Unicode only after a csv row has been split into fields by csv.reader.
class UnicodeCsvReader(object):
    def __init__(self, f, encoding="utf-8", **kwargs):
        self.csv_reader = csv.reader(f, **kwargs)
        self.encoding = encoding
    def __iter__(self):
        return self
    def next(self):
        # read and split the csv row into fields
        row = self.csv_reader.next() 
        # now decode
        return [unicode(cell, self.encoding) for cell in row]
    @property
    def line_num(self):
        return self.csv_reader.line_num
class UnicodeDictReader(csv.DictReader):
    def __init__(self, f, encoding="utf-8", fieldnames=None, **kwds):
        csv.DictReader.__init__(self, f, fieldnames=fieldnames, **kwds)
        self.reader = UnicodeCsvReader(f, encoding=encoding, **kwds)
Usage (source file encoding is utf-8):
csv_lines = (
    "абв,123",
    "где,456",
)
for row in UnicodeCsvReader(csv_lines):
    for col in row:
        print(type(col), col)
Output:
$ python test.py
<type 'unicode'> абв
<type 'unicode'> 123
<type 'unicode'> где
<type 'unicode'> 456