encfs didn't work for me either. See this comment from a year and a half ago:

http://news.ycombinator.com/item?id=895660

Dropbox supposedly encrypts server side. If you want to encrypt client-side, use SpiderOak or TarSnap. These hacks on top of Dropbox don't mesh with the semantics of Dropbox properly and will cause problems days, weeks, or months down the line unless managed extremely carefully.