The reason you opt to encrypt the wallet is to prevent someone from being able to get your coins without knowing the key to decrypt the wallet.
However, I 100% firmly believe that non-deterministic wallets should be abandoned entirely as a failed experiment. Perhaps they should be left as an option with clear warnings about their problems.
It is generally understood that your coins are only assuredly protected if you backup your wallet after your last transaction.
This is absolutely not generally understood, and the main dev team should not assume this. Multiple people with thousands of posts have told me that the wallet can always be recovered as long as you don't use more than 100 addresses on it after the backup. The 100 address generation is the part that is generally understood. The client should accommodate this view. If I have the password, I should not be able to destroy the coins before 100 addresses if it is common knowledge that you cannot. The new 100 keys should be able to be generated from the unencrypted ones if you have the password.
People keep losing their money and it's getting ridiculous. One of the biggest problems with Bitcoin is it's damn near impossible to use it safely.
You use strong words, but yeah, you have to understand in details how things work to be safe. We cannot expect that of most people. I still don't recommend my parents for example, to store wealth in bitcoins. And they're not totally computer-illiterate, they know how to send e-mails, to chat, to use facebook and watch youtube. My father even has a blog.
But I don't think they would be able to protect their keys. It's a pity.
I'm a computer security person, and I don't trust myself to keep a significant amount of money in Bitcoins. It's just too difficult to balance making sure you can always access the coins no matter what might go wrong with making sure others can never access them no matter what might go wrong.
A large part of the reason I think I did not back up as well as I should have is that I didn't want someone with access to the wallet file I was storing on the internet to be able to see the balance and transactions. I always reencrypted the wallet file, making it more of a hassle to do a backup. This may be a stupid line of thinking, but it may be helpful for devs to know this in making the client more user-friendly and secure.
I have spent several hours a day for the last two years reading the forums, and still made this error. I knew it was risky to put them on my computer, but I thought with my knowledge of bitcoin it was less risky than keeping them online. Obviously I was wrong.
That said, I had to make at least 4 catastrophic errors that are not at all logical to allow this to happen. If I only made any 3 of these errors I would still have the coins:
Used a wallet with a huge balance as a main wallet to conduct tiny transactions on bitcoin-otc
Only backed up the wallet on dropbox. Need to email, dropbox, and flash drive the backup
Left laptop in insecure location
Didn't do a wallet backup when I made an account on OTC a few days after encrypting the wallet. There was a warning to do so.
I lost over 1300 btc. Where does that put me on the loser's list of losses due to carelessness?