If you want encrypt it, it means you need to decrypt it. So it means that the algorithm that encrypt and decrypt are available somewhere in your application or drupal files.

I guess if the user that has access to your database he has also access to your files, or at least I guess he can have access easily.

And in that case, encrypted datas are useless.

The most important its to hash the password with algorithms like SHA1 and use a salt or private key, thing that Drupal 7 is doing.

This is just my point of view, but if you want do it what you can use this module http://drupal.org/project/aes and with some user hooks as `[hook_user_presave][1]` and `[hook_user_load][2]`.

The trick in this case it's that your module should be the last one before saving save the data and be the first one that decrypt data.


  [1]: http://api.drupal.org/api/drupal/modules!user!user.api.php/function/hook_user_presave/7
  [2]: http://api.drupal.org/api/drupal/modules!user!user.api.php/function/hook_user_load/7