We're using it to collaborate, generally with groups of people. As such, uber-sensitive files tend to not be the types of files we're sharing.

I like Tarsnap in theory, and as a backup solution it's great I'm sure, but it isn't meant to be a competitor to Dropbox for a lot of reasons, but mainly because Tarsnap would suck horribly at collaboration. It's far too private for that sort of thing.

For what it's worth, I've used Encrypted drives on Dropbox, and it works perfectly. It has to sync the entire volume if any one thing changes (for obvious reasons), but that solves the privacy issue. I've used it on the old 20G plan where 10G was encrypted and 10G wasn't, and it worked as expected.