If you want to use encryption with Ubuntu you have to consider 2 things:
One of the often overlooked installation options that is made available by many Linux installers is to “encrypt your home folder." If you want to use encryption it is the best to do this right from the beginning i.e. to make use of this option. Obviously, the best option if you already have Linux installed is to encrypt it manually and here are the instructions for doing just that. Click here for a great guide showing how to encrypt your home folder and here is another one.
Ubuntu can quickly encrypt USB flash drives and external hard drives. You’ll be prompted for your passphrase each time you connect the drive to your computer – your private data will be secure, even if you misplace the drive. Ubuntu’s Disk Utility uses LUKS (Linux Unified Key Setup) encryption, which may not be compatible with other operating systems. However, the drive will be plug-and-play with any Linux system running the GNOME desktop. You’ll have to install the cryptsetup package before you can use the Disk Utility’s encryption feature. Do so with the following command (alternatively you can use the Synaptic Package Manager to do so):
sudo apt-get install cryptsetup
To encrypt a drive, launch the Disk Utility from the Dash. This utility is installed by default – if you don’t have it installed for some reason, install the gnome-disk-utility package. Connect the removable storage device – for example, a USB flash drive or external hard drive – and select it from the Peripheral Devices section. Ensure you select the correct device so you don’t accidentally wipe important files. After selecting the drive, click the Unmount Volume button in the right pane — you can’t format the device’s partition while it’s mounted. A removable storage device normally has a single partition on it, but you can create additional partitions here – for example, you could have one unencrypted partition and one encrypted partition on a USB stick. Click the Format Volume button and enable the Encrypt underlying device check box.