If creating an article myself, I'd place it at a title with the umlaut. But I doubt that I'd move an article that was placed somewhere else (especially for old place names, which often have English "translations" that are more than mere *transliterations* into English orthography). The really important thing is what Dan said: Create redirects! Unless the naming conventions address a situation explicitly (and often even when they do), then one should create redirects from any title that might reasonably be linked to.

(Here I'm assuming that the city's name is really "Saßnitz" in German. I'm not sure if it is! I wasn't able to find a clear example.)