There isn't any correct answer for this. I personally prefer EncFS as I've followed it for years and know it's strengths and weaknesses (and it's open source), but Truecrypt, as far as know is just as good and I've seen other users comment about it working for them inside of FlexRaid.
I put in a request (and need to put in an official feature request) for EncFS to be built directly into FlexRAID, and Brahim at least acknowledges (and encouraged) the possibility of it. If you If it were to ever be implemented, the data would need to be encrypted via encfs methods prior to mounting the virtual drive, or copied to the new virtual drive with encryption already enabled. You can also use both (truecrypt drive with encfs content).
