Finally! Canonical implemented disk encryption via the Ubuntu installer for enhanced security in the upcoming Ubuntu 12.10 (Quantal Quetzal) operating system.This is something that should have been added years ago! However, it was possible before via the Alternate CD, which is now gone, of Ubuntu.
As you can see in the screenshot above (and the one below) the encryption option appears when you choose an installation type for your new Ubuntu system.
If you check the "Encrypt the new Ubuntu installation for security," in the next step you'll have to input a security key.
Moreover, for extra security there's also an option to overwrite empty disk space, which will make the entire installation process a lot longer. Keep in mind though, that any files outside the Ubuntu installation will not be encrypted.
Oh, and please don't confuse this with the "Home encryption" function, which is still available when you setup your username and password!