Actually, I've been using encfs on Dropbox, and size really isn't much of an issue. In practice, I mostly want to synchronize dot-files and other small files across computers, and broadband to Dropbox isn't terribly slow.

The real issue is conflict handling. When Dropbox detects a conflict between two versions which have become out of sync in a non-fast-forward type way, it creates two versions, the more recent version, and the old version with the host that created it and the date.

This is probably the right thing to do, but since it is doing so for the encrypted versions of the files, rather than the unencrypted versions, you end up with files like: "./j85-6kOFk3Gg0Lg1TiuqgqIz/8p2kJa8tboYSSpadfuiE9Tuq" and "./j85-6kOFk3Gg0Lg1TiuqgqIz/8p2kJa8tboYSSpadfuiE9Tuq (quiet's conflicted copy 2009-10-21)" with seemingly no way to access the conflict version through encfs.

If anyone has an idea how to fix this, I'd quite appreciate it. Otherwise, I'd really caution anyone from using encfs as a solution to encryption on Dropbox!

(TrueCrypt is a terrible solution for this as described in the posts below, due to needing to sync the whole volume every time.)