loop-aes is obsolete. that means it's old and not supported anymore.
dm-crypt (with luks) is the new standard for disk encryption.
Without doubts you should go for dm-crypt (with luks).
Advantage of dm-crypt over loop-aes:
- new standard, supported, future, etc etc
- no need to patch the kernel. The support for dm-crypt is already in the 2.6.x official kernel.
- if you use luks (Linux Unified key setup) there is the possibility to have more passpharase (max 5) for the encryption key. You could add/delete passphrases
- the key (with all the parameters - key length, algorithm etc) resides on you encryption partition at the first bloks of your hdd. This means that you can take you hard-drive and insert into another system(the kernel must be compiled with dm-crypt support) and it should work without any other modification from the user point of view.
- Maybe there are also other
If I am wrong, please correct me.