What I've learned from reading cases (and watching Law & Order, heh) is that if the police have evidence against you, it's easier for them to get what they want from the courts. "We already saw the child porn, we just want to check for more."
If all they have is a disk they can't read, it's going to be hard to get any judge to compel you to produce the key, especially if they can't prove you have the key. (And, in the US anyway, there is some precedent that you can't be compelled to produce the key anyway.)
The government wants more power, but the people have the power to take it away. It's just a checkbox away in your favorite OS's installer. (Well, in Debian anyway.)
With talk of 20 year prison sentences for ordering manga from Japan or talking to people on Myspace, I think it's pretty insane to not encrypt your disks. Who knows what someone else will think is illegal? I would rather not find out.