I see Ubuntu has had the option of an encrypted home partition since 7.10 using dmcrypt.
http://www.braggtown.com/blog/free-s...in-ubuntu-710/
This looks great but is only limited to using a pass phrase to authenticate. Is it possible to use it with key files off a pen drive or a thumb print scanner (assuming you had something like ThinkFinger as part of the base install)? It'd be great to just put your thumb on the reader and have Ubuntu automatically and transparently decrypt your home partition and log you in.