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What do you mean by "backups encrypted on the client?"

I would guess he means that the data is encrypted before ever being sent to backblaze. The answer is yes according to http://www.backblaze.com/backup-encryption.html

Rather, it's an optional yes.

Yep, that's what I meant, thanks.

EDIT: Actually, it looks like they can decrypt your data to restore it on their end, so it's a no.

I believe Tarsnap is your only viable option, if you want that enforce that degree of paranoia: http://www.tarsnap.com/

Bitcasa is also in the same realm, although I think Bitcasa has some cooler de-dupe technology.

Actually it is a yes, they cannot decrypt your data as they do not keep your password around. You have to enter it every time you want to restore a file, and it is not saved on their side only used to get the files then thrown away again.

Of course, if you have so sensitive stuff that you cannot accept it ever being on another server in clear text then it still a no on that question.

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