It seems to me that in UK, it's enough to have an electronic storage device (like a cellphone, camera, USB flash-drive or computer) for the police to be able to arrest you and throw you in jail, for two to five years.
Let me explain that in detail:
First, the UK appeal court decided that if the police ask you for your encryption key, you have to provide it (That is, not having it is not an excuse).
Second, they could always ask for the key to decrypt your TrueCrypt partition. (TrueCrypt allows you to hide information in seemingly unoccupied data of the storage device, in such a way that no traces remain that data was ever there).
Third, good luck explaining that nothing is actually hidden there (that the seemingly random data in unoccupied space is actually random data in the unoccupied space); remember, not providing the (non-existent) key doesn't get you off the hook.
I hope I can ascribe this scenario to incompetence; the alternative (malice) makes me shiver.
Later edit: I can also ascribe this scenario to paranoia methinks ... :-\