A guy accused of possessing kiddie porn isn't the case you want to take to court to set a constitutional rights precedent. However, the issue of forced decryption of your digital information is a real one. If the government can force you to divulge such things as memorized passwords and passcodes, where is the line that says "You may go no further in extracting information from this citizen." Right now, the guy has been locked up for 16 months. What if it was information that we thought was related to an upcoming bomb attack? Are we going to authorize torture? "Enhanced interrogation techniques"?
There needs to be a very clear and bright line that the government cannot cross in its search for evidence, and the court system, a part of the government, appears to be sandbagging in any attempts to draw it. This is not good.
You may want to consider storing you important data in offshore repositories hosted in countries with strong personal privacy laws.