Truecrypt is a tool I have been using for a while, it is a great product and… free!

It allows for full disk encryption, being your desktop hardisk or a USB stick.

A new version has just been released, version 7, and it now provides:
- Hardware acceleration
- Auto-mount (windows)
- Security improvements related to windows hibernation files

Its main features are:
- Creates a virtual encrypted disk within a file and mounts it as a real disk.
- Encrypts an entire partition or storage device such as USB flash drive or hard drive.
- Encrypts a partition or drive where Windows is installed (pre-boot authentication).
- Encryption is automatic, real-time (on-the-fly) and transparent.
- Parallelization and pipelining allow data to be read and written as fast as if the drive was not encrypted.
- Encryption can be hardware-accelerated on modern processors.
- Provides plausible deniability, in case an adversary forces you to reveal the password:
- Hidden volume (steganography) and hidden operating system.

More info can be found on the following website: http://www.truecrypt.org/