I have encrypted my Fairphone. I am very happy we have this possibility because some manufacturers seem to remove that option from Android.
There are some minor annoying problems though and i think the most obvious one is that you will have to enter your device password twice each time your powered your phone of and want to power it on again. I am pretty sure when Android L is released, Google will have found a solution for this.
Also, the Fairphone Support Article oversimplifies a bit: The encryption makes your device somehow more secure against specific attack vectors, but when its powered on, the data is decrypted. So everybody trying to hack a phone powered on, will have the same access as on a unecrypted device. This is not specific to Fairphone or Android, it is the same with Mac OS (FileVault), Windows (BitLocker) and Linux (dm-crypt) device encryption.
Other then that, i have no problems with encryption and did not notice slower operation. I will have a look at the alarm problem @carpe_diem80 mentioned above tomorrow morning and report back here.