What is the best format to save my files in?
The advised way to go is to use UTF-8 everywhere in your web application. It includes :
A nice cheatsheet : http://developer.loftdigital.com/blog/php-utf-8-cheatsheet
Edit : Just want to add, related to your question context, that PHP don't handle file encoding in UTF-8 with BOM. Use UTF-8 without BOM and you'll be just fine.