Encrypted WiFi won't stop clients on the network from sniffing your packets.
It will, however, stop unauthorised computers from sniffing any network data.
It will, however, stop unauthorised computers from sniffing any network data.
Are you sure that neither WEP nor WPA/WPA2 do it this way?
Are you suggesting that no generation of WEP or WPA protects against other authorized wireless users of the same AP, because they're "on your network"?
[rewritten completely to seek clarification]
If you have control over the internet between the AP and your server, then you're safe. If you don't, then how safe you are depends on how much you can trust the owner of each router along the way. In general, you should be okay, except that every now and then you might end up on an untrusted router, and it's then game over.