I've had an idea for a program which I'll have a go at doing once I have some spare time. The idea is to protect your important files from prying eyes if you lose your USB storage device. This requires a little explanation... bear with me.
On my USB device, I have a "docs" folder, an "apps" folder, a "music" folder, etc. The only file in the root of the drive is a text file, titled "Read me if found" which says "if found, please return to..." and it also says something like "if you are unable to return it for any reason, please email the contents of the 'docs' folder, no questions asked, to..." This means that if (read when) I lose my USB device, if someone is too lazy or greedy to return the actual drive, at least I might get my docs (which I will inevitably fail to back up) back.
Now, I had the idea of making this into an application disguised as a text document. Windows XP (by default) doesn't show file extensions, and if the icon is the default text document icon, most people would fall for it (including me, probably). From there, the possibilities are endless! Let's not get too carried away though. I figured this app could open a text document hidden in the directory structure as a disguise, and meanwhile, in the background, it 7-zips everything in the docs folder into a password protected archive, then deletes the original files. Now, the only remaining contents of the docs folder is one 7-zip file. This means that if someone malicious finds your docs, they won't be able to read them (unless they get suspicious, and know how to look at 'deleted' files), and if somebody good natured finds it, you'll get a friendly email with attachment, or even a returned USB device.
I'm well aware it's not foolproof (security through obscurity, yadda yadda), but I think it would work most of the time. I want to know what other people think, though.