latex - babel & inputenc errors when using Hebrew

Hello,
I'm considiring using latex instead of libreoffice writer as my main tool for writing essays (I'm a history student). I'd love to start using it but just can't get Hebrew working.
I've downloaded a Hebrew text file which works ok. The only problems I get are the babel error message (which I don't really care about since the pdf output works) and that I can't see the Hebrew fonts when they are in my text editor. I've uploaded it so you can see.

I've tried to insert my own text into the same file but I get (from TexWorks) two error messages:

Quote:

---

Package babel Warning: No hyphenation patterns were loaded for
(babel) the language `Hebrew'
(babel) I will use the patterns loaded for \language=0 instead.

---

and:

Quote:

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! Package inputenc Error: Keyboard character used is undefined
(inputenc) in inputencoding `8859-8'.

---

I get the same messages when I writing my own text, such as:

Quote:

---

\documentclass {article}
\usepackage[hebrew,english]{babel}
\begin{document}
שלום עולם!
\end{document}

---

adding \usepackage[utf8]{inputenc} gives me:

Quote:

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! Package inputenc Error: Unicode char \u8:ש not set up for use with LaTeX.

---

and adding \usepackage[utf8x]{inputenc} gives me:

Quote:

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! LaTeX Error: File `utf8x.def' not found.

---

I'm using the texlive on Debian Wheezy. I have installed the texlive hebrew package as well.
I've have searched for a solution for hours and though I have found some references to these problems, none of the offered solutions seems to work.

I would really appreciate your help.