Certainly, but the practical privacy implications are probably similar. In case of a stolen phone, the thief has access to all the files in both of these cases.

Certainly, but the practical privacy implications are probably similar. In case of a stolen phone, the thief has access to all the files in both of these cases. Sure it would be cool if Dropbox wouldn't have any access to our files, but I don't see how it would happen without eroding the usability. It could be an opt-in feature of course.