Index: wp-includes/formatting.php
===================================================================
--- wp-includes/formatting.php	(revision 17246)
+++ wp-includes/formatting.php	(working copy)
@@ -818,10 +818,9 @@
 }
 
 /**
- * Sanitizes title, replacing whitespace with dashes.
+ * Sanitizes title, replacing whitespace and a few other characters with dashes.
  *
  * Limits the output to alphanumeric characters, underscore (_) and dash (-).
- * Whitespace becomes a dash.
  *
  * @since 1.2.0
  *
@@ -847,6 +846,7 @@
 	$title = strtolower($title);
 	$title = preg_replace('/&.+?;/', '', $title); // kill entities
 	$title = str_replace('.', '-', $title);
+	$title = str_replace( array( '%e2%80%93', '%e2%80%94' ), '-', $title );	// ndash and mdash octets
 	$title = preg_replace('/[^%a-z0-9 _-]/', '', $title);
 	$title = preg_replace('/\s+/', '-', $title);
 	$title = preg_replace('|-+|', '-', $title);