What does this have to do with anything? How is the old sync system any different, then?
> Even if it is encrypted, presumably it is then derived from the user's password. For the average user, that might be 20-30 bits of entropy. Not good.
The other alternative here is having a sync system that your average user can't even figure out to use. On the other hand, it doesn't take anything away from you.
> I don't use sync, but if I did, now I essentially need a 2048-bit password to get good encryption on it.
You are confusing key lengths from algorithms like RSA with symmetric algorithms. The keys that are used for encrypting data will be either 128 or 256 bits (haven't checked) and used with some symmetric cipher.
Therefore, if you don't trust key stretching to be sufficient with a strong passphrase, you can grab 16 or 32 bytes of randomness, encode it however you wish and use it as a password.