IMO, Encryption will eventually happen for at least PD and enforcement agencies. It may take another 10-15 years (next equipment cycle), but will happen.
I've known a variety of people in law enforcement, none of whom like private sector folks listening in. They often use their Nextels or (in older times) landlines or MDTs to converse because of scanners.
Once the basic infrastructure moves to digital management and digital voice, poking specific holes for public service needs is easy (open up certain talk groups, two talk buttons, one secure -- one open).
The reliability and cost issues and momentum still outweigh the desire for encryption. Once the current breed of systems have encryption with minimal cost premium, encryption will show up anywhere the systems are upgraded. Medium grade encryption with spread-spectrum technologies is almost free to implement, strong encryption won't be far behind.
For now, because digital is relatively new in replacement cycle times, there are factors in deployment that slow encryption. In a few years, those issues will vanish along with the cost premium. After that, encrypted digital will gradually replace everything else.
Just my opinion, but I'd bet at least a cup of coffee on it. On the other hand, you should still get at least a few good years out of your next scanner, but don't count on ten.