According to this page (it claims to be the manual for ifcfg):
there is a field for encryption keys.
The last program to run will take priority, so if you run iwconfig after running ifcfg (with no wireless options set or otherwise), then iwconfig should work fine. The only problem I can see (and I can't check this as my laptop's not here), is that you might not be able to change things like ESSID or encryption keys on an active card. If ifcfg activates the card and then you run iwconfig, you might run into problems. As I said, though I don't know.
You could avoid all this by just using ifconfig (or dhclient) and iwconfig directly in your script.