I use two types of encryption. For e-mails I use PGP (pretty good privacy) which is the standard for e-mail. It is very secure, but not simple to set up or use.
For file encryption I use TrueCrypt. Sensitive files on my computer are encrypted as is a SD Card that I carry in my wallet. It is very easy to use.
Both methods are as secure as any methods available to the public. Both have been very completely studied and are not "crackable". Both items are available free on the net.
That said, almost any method can be cracked given enough computing power and enough time. However with these two methods the required resources to crack them is well beyond the level currently available. Think massive computing system and decades of time.
PGP is a very sophisticated and not very user friendly method of encrypting e-mail or other documents that are being sent from one person to one other person. Rather than explain all that.. let me refer you to this wiki. Pretty Good Privacy - Wikipedia, the free encyclopedia
There is an excellent yahoo group that will help you get started with PGP.
If you want to encrypt a drive (hard drive, flash drive etc) or a segment of a drive like a file or directory, use TrueCrypt. This is a very easy to use and very secure method. Here is what Wiki has to say about it.
TrueCrypt is a free software application used for transparent real-time on-the-fly encryption. It can create a virtual encrypted disk within a file, or a device-hosted encrypted volume on either an individual partition or an entire storage device. It can encrypt the Windows boot partition or entire boot drive, and has the ability to create and run a hidden encrypted operating system whose existence is deniable. It is open source software, distributed under the TrueCrypt Collective License. TrueCrypt natively runs under Microsoft Windows, with support for Mac OS X and Linux.
I have disk segments encrypted on all my machines. Everything sensitive is stored there. I also carry a SD chip in my wallet which has an encrypted segment with personal information on it. I know that only I can access it, but I can go to almost any computer and see my info. I find that very useful. When I get around to it, I will add portable linux to the chip so that I can boot my own operating system on any computer and not affect (or be affected by) the host machine I am using.
I use both, but PGP is a bit cumbersome for casual use unless you are running windows which has an excellent "front end". I use linux and have not found a good "front end" for it yet.
I use Linux. There are many flavors and at the moment I am not using any so I don't know which may be best. Damn Small Linux was a winner about a year ago. Google portable applications linux for details.
I need to get back up to speed on portable apps. I have used many like open office, Firefox and others. Just have not been messing with that for about a year now.