Mac OS X full-disk encryption, with Time Machine

Full Disk Encryption from Check Point will encrypt your hard drive but also works with Time Machine. The Time Machine backup will run seamlessly in the background and stored unencrypted.

If you're still running 10.5, check out PGP Whole Disk Encryption. I ran it when I was on Leopard; basically the same as Check Point but they actually provide pricing (CP is corporate-licensing only I think) and you can purchase/download from their website.

If you've gone to 10.6, you're out of luck until they (PGP) release 10.0 with Snow Leopard support. It's "forthcoming." Also be forewarned, PGP is legendary for poor customer support. However, the product is bulletproof.

The answer now, of course, is to upgrade to OS X Lion and use FileVault 2. This handles full-disk encryption and works with Time Machine.