I am using ICSharpCode.SharpZipLib.Zip.FastZip to zip files but I'm stuck on a problem: 
When I try to zip a file with special characters in its file name, it does not work. It works when there are no special characters in the file name.
I think you cannot use FastZip. You need to iterate the files and add the entries yourself specifying:
entry.IsUnicodeText = true;
To tell SharpZipLib the entry is unicode.
string[] filenames = Directory.GetFiles(sTargetFolderPath);
// Zip up the files - From SharpZipLib Demo Code
using (ZipOutputStream s = new
    ZipOutputStream(File.Create("MyZipFile.zip")))
{
    s.SetLevel(9); // 0-9, 9 being the highest compression
    byte[] buffer = new byte[4096];
    foreach (string file in filenames)
    {
         ZipEntry entry = new ZipEntry(Path.GetFileName(file));
         entry.DateTime = DateTime.Now;
         entry.IsUnicodeText = true;
         s.PutNextEntry(entry);
         using (FileStream fs = File.OpenRead(file))
         {
             int sourceBytes;
             do
             {
                 sourceBytes = fs.Read(buffer, 0, buffer.Length);
                 s.Write(buffer, 0, sourceBytes);
             } while (sourceBytes > 0);
         }
    }
    s.Finish();
    s.Close();
 }
You can continue using FastZip if you would like, but you need to give it a ZipEntryFactory that creates ZipEntrys with IsUnicodeText = true.
var zfe = new ZipEntryFactory { IsUnicodeText = true };
var fz = new FastZip { EntryFactory = zfe };
fz.CreateZip("out.zip", "C:\in", true, null);
You have to download and compile the latest version of SharpZipLib library so you can use
entry.IsUnicodeText = true;
here is your snippet (slightly modified):
FileInfo file = new FileInfo("input.ext");
using(var sw = new FileStream("output.zip", FileMode.OpenOrCreate, FileAccess.ReadWrite))
{
    using(var zipStream = new ZipOutputStream(sw))
    {
        var entry = new ZipEntry(file.Name);
        entry.IsUnicodeText = true;
        zipStream.PutNextEntry(entry);
        using (var reader = new FileStream(file.FullName, FileMode.Open, FileAccess.Read, FileShare.ReadWrite))
        {
            byte[] buffer = new byte[4096];
            int bytesRead;
            while ((bytesRead = reader.Read(buffer, 0, buffer.Length)) > 0)
            {
                byte[] actual = new byte[bytesRead];
                Buffer.BlockCopy(buffer, 0, actual, 0, bytesRead);
                zipStream.Write(actual, 0, actual.Length);
            }
        }
    }
}
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