The disadvantage of utf-8 is that it's a variable length encoding. This means that certain operations which are usually O(1) are O(n) with UTF-8: one is finding the n-th character in a string, the other is finding the length in characters (though that's also true for null terminated C strings)
Another problem is that swapping a character in a string might cause the (byte) length of the string to change, which might force a reallocation (also slow) and if you're doing it in a loop over the string, your loop-ending condition might now have changed because the string (byte) length has changed.
In-fact, iterating over a UTF-8 strings characters is not something you can use a simple for loop any more, but something that requires at least one, possibly two function calls per character (one to find the next character, one for finding the end of the string which might just have moved due to your modification).
Finally, efficiency: For English texts, UTF8 is the most efficient Unicode encoding, but for other languages, that isn't true. A Chinese text would require three to four bytes per character, as opposed to just two in UCS-2 (which is what most OSes and languages use, even though it doesn't support encoding all of Unicode)
For these reasons, dealing with a fixed-length encoding is much more convenient (and speedier) while the string is loaded into memory. UTF8 is great for i/o and storage on disk, but in memory, it's inconvenient.
UCS-2 or UTF-16 is the reverse: it's very inconvenient on disk and for i/o (need I say more than BOM), but in-memory UCS-2 is very convenient, even though it doesn't support all of Unicode. It's in-fact so convenient that it's used by most programming environments (see yesterday's discussion about strings being broken)
Take python 3.3 and later for example: even though they now have full support for Unicode, also for characters outside of the BMP and thus requiring more than two bytes of storage, they didn't go with a variable length in-memory encoding, but they now chose the shortest width possible fixed length encoding that can be used for a particular string.
This seems like an awful lot of work to me, but they decided the fixed-lengthness was still worth it.