While I'm not an expert in the matter as Antony claims I am, I do use some forms of encryption when I store data on my hard drives.
On my laptop (which runs Windows) I encrypt a couple of directories containing sensitive data using EFS, which is built into Windows. EFS is fully transparent, meaning that I don't need to do any decryption prior to using whatever files I want. Encryption is performed by a key that's linked to your user account, so your Windows password is required to do any decryption.
I also have a FreeBSD box that I dump backups to. It boots off a CD and saves volatile files to a floppy, so I use the built-in
geli utility, which encrypts the drive at the block level. Geli is useful because it's fast (especially if I use Blowfish instead of AES, seeing as this is an old Pentium 3), but again it is a full disk encryption solution.
The reason I prefer encryption of just a few files rather than the entire disk is that there are certain files, say those that belong to the OS, that don't need to be encrypted. If I encrypt those, there's a ton of additional overhead required just to boot up, let alone do anything else. I'd rather encrypt sensitive data like my browsing history, e-mail, and IM chats, and leave non-sensitive data in the clear.
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Laptop: HP Compaq nx6325 - Turion 64 X2 @ 2GHz, 2GB DDR2, 100GB HD, ATI Radeon X300, 15" LCD, Seven Pro
Handheld: Palm Treo 650 - Intel PXA270 @ 312MHz, 10MB RAM, 32MB flash, 2.7" LCD, Palm OS 5.4