I like it. If you want, you can make local encrypted backup. If you are lazy (and lots of terrorists and drug dealers probably are) you just flip the iCloud switch on at the first prompt. :) I have read that airport security is also not 100% effective but it is enough for these kinds of problematic people.

But you can't do so automatically. You have to open iTunes (or Finder) and explicitly click a button.

If Apple is privacy-oriented, they should've allowed this long time ago. Unlike iCloud backups, this is certainly not a legal issue, as the "local" backups stored on one's computer are already fully encrypted.