Hmm, good point. According to their documentation,
"synced data is encrypted when it travels between your computer and Google’s servers" (this seems to refer to encryption in transit, i.e. SSL) and
"As an added layer of protection, your saved passwords are encrypted on your computer and on Google’s servers using a cryptographic key."
http://www.google.com/support/chrome/bin/answer.py?hl=en&...
That does seem to imply that only passwords are encrypted while in storage. That's not surprising, since Chrome has a "master password" for password encryption, but unlike Firefox it does not require transferring an encryption key for your other sync data. (The client-side encryption key is the reason you need to "pair" your devices to set up Firefox Sync, instead of just entering a username and password.)