Hi,
The Online Manuals state it quite clearly:
http://msdn.microsoft.com/en-us/library/ms176089.aspx:
char [ ( n ) ]
Fixed-length, non-Unicode character data with a length of n bytes. n must be a value from 1 through 8,000. The storage size is n bytes. The ISO synonym for char is character.
varchar [ ( n | max ) ]
Variable-length, non-Unicode character data. n can be a value from 1 through 8,000. max indicates that the maximum storage size is 2^31-1 bytes. The storage size is the actual length of data entered + 2 bytes. The data entered can be 0 characters in length. The ISO synonyms for varchar are char varying or character varying.
http://msdn.microsoft.com/en-us/library/ms186939.aspx:
nchar [ ( n ) ]
Fixed-length Unicode character data of n characters. n must be a value from 1 through 4,000. The storage size is two times n bytes. The ISO synonyms for nchar are national char and national character.
nvarchar [ ( n | max ) ]
Variable-length Unicode character data. n can be a value from 1 through 4,000. max indicates that the maximum storage size is 2^31-1 bytes. The storage size, in bytes, is two times the number of characters entered + 2 bytes. The data entered can be 0 characters in length. The ISO synonyms for nvarchar are national char varying and national character varying.
So, depending on whether your horizon goes beyond the US or not, you may argue either for CHAR(1) or NCHAR(1), respectively.
Best regards,
Dietmar Weickert.