It depends on what you want users to do. If you want to prevent other users from seeing what a user has in their home directory, chmod 0700 would do the trick.

If you want the user to be able to have web pages in their home directory, consider chmod 0701.

This doesn't prevent the root user from seeing what is inside the user's directory. Encryption is only a requirement if you only want the user to be able to see their files, it may put a burden on the server though.

"Thank you. What is the difference between 700 and 701 ?"

700 gives the owner permission to read, write and execute the file, whilst denying access to everyone else. 701 allows others to execute files (but denies others read and write privileges). For more information visit this site: http://ss64.com/bash/chmod.html

If we assume you are happy with the logical security for a second (chmod et al), consider some other events...

a) your system is hosed and you want to backup the system from another linux install...

encryption makes this rather difficult much of the time, however if you backup regularly then it is far less of an issue.

b) the system may be physically stolen...

encryption stops the unauthorised access of your data in this event, but it may mean your access may be made more difficult in the normal case

c) the encryption starts to error, if it uses a single container file, then all you files are likely gone, if it encrypts each file individually who knows...

The use (or non use) of encryption should be justified, don't just do it for no reason.

Thank you. What is the difference between 700 and 701 ?