This gives a false sense of security, because Google still has the keys. If you store your files on Google's servers, then they can access the files. Either law enforcement can force them to do it, or the server admins can steal your data, or just expose it through negligence. The best way to protect files is to use encryption, but it must be done locally, before files are uploaded - not on the cloud server.
There are many tools that will do this: Truecrypt www.truecrypt.org will encrypt entire disk volumes. Syncdocs www.syncdocs.com will encrypt files stored on Google Drive.
With Syncdocs or TrueCrypt you own the keys. Your files are encrypted BEFORE they are sent to Google Drive.