Just a short one on this, as this problem has become commonplace. The solution is trivially easy. We just don't do it. The VA has finally got what they should've known before losing personal records. See VA buys encryption tools
Earlier I talked about this in January 2005 and April 2005. In this USA TODAY article, Jon Swartz writes, "Encryption can be pricey. Gartner estimates a company with 100,000 customer accounts can spend $30 to $40 per laptop on data encryption. Yet, the cost of a data breach is even higher." So, when will we start thinking "security" along with the initial purchase? Pracically speaking, AV software is free (at least for the first year). Both XP Pro and Mac OS X come with "free" disk encryption, don't they? (See Laptops and PII Losses.) We've been talking about this for years and have known the answers.
I am on a PGP mailing list and received an invitation to a jointly-sponsored webinar with Vontu on September 13, 2006: Stolen Laptops: How to Recover and Reduce Risk. I've previously told you how to do this, but if you want to hear from a vendor's perspective (I respect both PGP and Vontu), register and tell them I sent you. (I don't think I'll get anything for it, but you never know.)
*Notebooks, not laptops!.