The downside, of course, is no differential sync'ing. So, if you make a change to your volume, you must re-upload the entire volume.

Worth doing for some files, yes, but still a pain. Per-file encryption would be ideal, but a monstrous pain to implement with TrueCrypt.

Dropbox is probably not crazy about widespread encryption because it would eliminate their ability to perform deduplication. Perhaps they could get around this if you had a special encrypted quota. For example, you have 5GB of space and 100MB of encrypted space.