Encrypted filesystem image

[Bart Silverstrim]

Hello,

I have an external USB hard disk on which I'd like to create an 
encrypted file that can be mounted so that if I want to back everything 
up, I can just copy the file to another system or drive.

1) Is there an easy tutorial/howto to do this?  I've googled for it and 
it looks like theres a few ways to do it now, but I don't know what is 
considered out of date or what other people have experienced with 
different methods to make this painless.  I'd like to do it in a way 
that either the whole drive partition is formatted as an encrypted 
system or there is a file that is mounted in loopback to appear as a 
separate filesystem and acts as a sparse file, growing on the drive as 
data is added until the "maximum file size" I specify is reached.

2) I've looked at truecrypt, but either I'm doing something wrong or 
Ubuntu isn't entirely truecrypt friendly with how it mounts the 
truecrypt files and/or permissions with root and the admin user when 
mounting the image so I have problems with copying files to the image 
file because it gets mounted as root and I'm trying to use it as a user.