I got my D3 yesterday (upgraded from a D1) and I was pleasantly surprised by included encryption options. If you go into Settings - Locations and Security, about half way down is "Data Encryption". Within that menu, you have the option to "Encrypt all personal data on your phone", which requires a reboot. There is a second option to only encrypt what's on the Internal memory and SD Card as well.
I am assuming this is strictly OS supported encryption and not hardware encryption like you might see built in to a BB (TPM) or some other 'corporate' style device? I am curious about the performance hit... and if it might have any impact on trying to root the device?