diff --git a/IPython/iplib.py b/IPython/iplib.py
index 4c5d9b2..07269bc 100644
--- a/IPython/iplib.py
+++ b/IPython/iplib.py
@@ -6,7 +6,7 @@ Requires Python 2.3 or newer.
 
 This file contains all the classes and helper functions specific to IPython.
 
-$Id: iplib.py 2885 2007-12-07 10:59:06Z vivainio $
+$Id: iplib.py 2889 2007-12-12 19:32:33Z vivainio $
 """
 
 #*****************************************************************************
@@ -79,6 +79,16 @@ import IPython.prefilter as prefilter
 import IPython.shadowns
 # Globals
 
+# make converting between str and unicode easy, so str() will work most of the
+# time
+
+try:
+    sys.setappdefaultencoding(sys.stdin.encoding or 'ascii')
+except:
+    # Many python versions don't have sys.setappdefaultencoding
+    reload(sys)
+    sys.setdefaultencoding(sys.stdin.encoding or 'ascii')
+
 # store the builtin raw_input globally, and use this always, in case user code
 # overwrites it (like wx.py.PyShell does)
 raw_input_original = raw_input
@@ -1911,7 +1921,7 @@ want to merge them back into the new files.""" % locals()
         # this allows execution of indented pasted code. It is tempting
         # to add '\n' at the end of source to run commands like ' a=1'
         # directly, but this fails for more complicated scenarios
-        source=source.encode(self.stdin_encoding)
+        source = str(source)
         if source[:1] in [' ', '\t']:
             source = 'if 1:\n%s' % source
 
diff --git a/doc/ChangeLog b/doc/ChangeLog
index e8587ad..ef174ea 100644
--- a/doc/ChangeLog
+++ b/doc/ChangeLog
@@ -1,3 +1,13 @@
+2007-12-12  Ville Vainio  <vivainio@gmail.com>
+
+	* genutils.py (abbrev_cwd): Terminal title now shows 2 levels of current
+	directory.
+	
+	* iplib.py: We now set system default encoding to sys.stdin.encoding with
+	sys.setdefaultencoding, after a patch by 'pan'. This makes str() calls that
+	IPython still has implicitly work. This should be removed when such calls 
+	are cleaned.
+
 2007-12-12  Fernando Perez  <Fernando.Perez@colorado.edu>
 
 	* IPython/Shell.py (_select_shell): add support for controlling
@@ -5,6 +15,19 @@
 	having to modify MPL config files.  Added unit tests for this
 	feature, though manual/docs update is still pending, will do later.
 
+2007-12-11  Ville Vainio  <vivainio@gmail.com>
+
+	* ext_rescapture.py: var = !cmd is no longer verbose (to facilitate
+	use in scripts)
+
+2007-12-07  Ville Vainio  <vivainio@gmail.com>
+
+	* iplib.py, ipy_profile_sh.py: Do not escape # on command lines 
+	anymore (to \#) - even if it is a comment char that is implicitly 
+	escaped in some unix shells in interactive mode, it is ok to leave
+	it in IPython as such.
+
+
 2007-12-01  Robert Kern  <robert.kern@gmail.com>
 
 	* IPython/ultraTB.py (findsource): Improve the monkeypatch to
@@ -39,6 +62,7 @@
         readline_omit__names setting.
 
 2007-11-08  Ville Vainio  <vivainio@gmail.com>
+
 	* ipy_completers.py (import completer): assume 'xml' module exists.
 	Do not add every module twice anymore. Closes #196.