MobileOrg now supports encryption so that files on your WebDAV server or Dropbox are not stored in plain text.
Be sure you are using MobileOrg 1.5+ and Org-mode 7.02+.
To configure Org-mode to use encryption, use:
;; Enable encryption (setq org-mobile-use-encryption t) ;; Set a password (setq org-mobile-encryption-password "mypassword")
org-mobile-push from Emacs after reloading your configuration file. You should notice that the files in your staging area are encrypted.
Next, open MobileOrg and enter your encryption password in the Settings tab. Perform a sync, and you are done.