Encryption in a two-way radio system is very definitely a double edged sword. In order to do it right, an agency really needs to change the encryption keys regularly, ensure that lost or stolen radios are not only disabled but the keys are erased, and maintain VERY tight security around the key generation/loading system. In almost every real world public safety (cop/fire/ems) environment this just isn't happening, which at best is dangerously complacent (we think we're secure when we really aren't) and at worst means that some folks that SHOULD get calls don't because of poor configuration.
One of the worst arguments for encryption is that it enhances operational security - a SWAT team "needs" it so that the bad guys don't hear them coming for example. Unfortunately, all the bad guys have to do is look for an uptick in calls that are encrypted, and they get telegraphed warning that a SWAT operation is going down. The bad guys don't NEED to hear the traffic to know to load up - they just have to see an increase in traffic. Again, the encryption employed means that the agency has a false sense of security. It's far better for SWAT operations to use simplex analog, rather than digital in any event, as often that 30mS vocoding delay is VERY important in split second situations.
Encryption is a good thing however where sensitive information is being relayed - like the social security numbers, phone numbers and personal information the previous posters have alluded to. It's good operation practice to have dispatch unencrypted, but services (license plates, and other details) encrypted in some manner just to prevent identity theft if nothing else. It's better of course for this kind of check to be done over the data networks rather than over the air by voice, and less error prone too.
Bottom line is that for almost all agencies, encryption is an expensive solution to a problem that's better tackled in other ways.