From IBM's Z9 mainframe release: "The System z9 will also provide for increased data protection with IBM storage devices, beginning with the IBM System Storage TS1120 Tape Drive, which is planned to feature new encryption capabilities in the second half of 2006."
This follows on from the LTO consortium's addition of encryption facilities to its LTO 4 specification.
Read more about IBM's proprietary TS1120 tape drive here. Expect Sun DMG to add encryption to its StorageTek drives soon.
It seems to me that encrypting backup tapes is but one aspect of an overall data security policy. Immediately you need to have some form of key management in place; a facility to create, assign, and store keys in a highly reliable and safe form of storage. You also need a policy to decide which tapes to encrypt. The simplest and safest policy is to encrypt all tapes that go out of your premises.
With all the pressing demands of compliance and security in general it is probably worthwhile to have an overall compliance, security and data protection policy worked out to suit your business. It's all cost, cost and yet more cost. There is no profit in security, except for security product suppliers.