This one may be a little esoteric, but I’ve always configured my ~/.bashrc to set $PS1 in bash to a simple ‘$ ‘, but show all relevant information in the terminal (or screen) window title.
This is generally fine but, on OS X at least, if a directory name contains an extended character such as ‘Æ‘ then what actually happens is that all characters are sent to the window title except for the extended character, which is pre-pended to the prompt for the following line. Being a double-byte character, this then confused the shell’s line-editing abilities, and characters have a tendency to disappear if the cursor keys are used for editing.
After suffering with this for several months, this interesting problem reached my needs-a-fix threshold and I decided to do something about it 😉