Being the good security citizen that I am, I thought I would give Apple's FileVault a try. FileVault encrypts your home directory, which is useful for somebody whose laptop is often left unattended in a classroom during cookie breaks, like mine is. Turning FileVault on is a cinch, and performance-wise, I barely noticed a difference. The only problem I ever had was that when you delete files, the space isn't reclaimed on disk until you allow FileVault to compress the space, but that only takes a few seconds whenever you log out, so I was happy.
Then, I decided to upgrade from 10.3.4 to 10.3.7. The update proceeded normally, without warnings or questions. But when I rebooted, it was as if I had installed OS X from scratch; no personal settings, no environment settings, nothing. The only things that survived were my username and password. Everything that eminated from my home directory was gone.
To date, I have no idea what really happened. My assumption is that the upgrade process saw a large, encrypted data block and decided "I don't know what to do with that, and it is in my way, so I'll get rid of it". The saddest part of all this is that FileVault is intended to *protect* your data. Sigh.