TrueCrypt is exactly the "encrypted drive" solution. It has problems. They are described in this thread.
If there were a way to prompt the user for the password to an encrypted drive on startup for all OS, with an equivalent for headless machines... then perhaps encrypted drives would be practical enough to be used by psql
Perhaps TrueCrypt _is_ the solution you are looking for. It allows you to encrypt the root/system partition (at least on Windows) and can ask for decryption password at boot time.