What impact does full hard drive encryption have on performance?

The "HP Protect Tools" is a rebadged McAfee/Safeboot FDE product. The performance impact shouldn't be too bad -- I'm assuming that you're using AES.

We encrypted about 5,000 laptops three years ago, and our folks didn't report any significant performance issues. A few older boxes blue-screened, that's about it. You may be experiencing slowdowns immediately after enabling encryption... encrypting the disk can take 8-20 hours depending on the vintage of the equipment and size of the disk.

We've used Safeguard Easy for years and Truecrypt's whole disk encryption since it came out, and neither has caused a big performance hit; even the older notebooks run development and database software without a noticeable difference in speed. Some people will even tell you that whole disk encryption software makes some operations run considerably faster due to compression, improved drive read routines, pipelining and the like. I wouldn't go that far, but as with most things, the truth is probably somewhere in between.

The peace of mind from encrypting your disk, particularly if you have any kind of regulatory/compliance threshold in your industry (or are just paranoid) is worth the minimal hit of the encryption software we've used for this purpose.