Encryption takes more horsepower than sending data in the clear. It really shows up on mobile PCs transmitting large hunks of data — for example, a PowerPoint presentation — over a dial-up phone line. Firewalls and other server systems should employ hardware crypto engines. With these there are no performance issues. I expect that this functionality for mobile PCs will migrate to PC cards with crypto engines. When will this happen? Within the next 18 months.
Businesses who understand the use of crypto for privacy in electronic documents also understand the need for the emergency recovery of that data. Whether this is done by saving an individual's private key information, encrypting it with a trusted third party's key, or saving all keys used to encrypt all documents, it is well understood that some mechanism is needed for the recovery of encrypted files owned by an individual, by the individual, or a company, by the company for business or law enforcement reasons. Key recovery of session keys used to encrypt a network connection is a requirement of law enforcement. VPNs must use the strongest crypto available and feasible given the hardware on which it is being run. Weak cryptography (for example, 40 bit key length) should be completely avoided.
VPNs should be used for all information exchange. I don't want to have to "go encrypted" when something secret is about to be sent. I want everything to be encrypted. It should be as commonplace as people sending postal mail in sealed envelopes. It will also ensure that the VPN mechanism is working.