The Washington Post is reporting that Google will finally step up security efforts on Android and enable device encryption by default. The Post has quoted company spokeswoman Niki Christoff as saying “As part of our next Android release, encryption will be enabled by default out of the box, so you won't even have to think about turning it on.”
That "next Android release" should be Android L, which is currently out as a developer preview and is expected to be released before the end of the year.
The move should bring Android up to parity with iOS. Apple recently announced enhanced encryption for iOS 8, which Apple says makes it impossible for the company to decrypt a device, even for law enforcement. While Android's encryption was optional, it seems to work in a similar way, with Christoff saying "For over three years Android has offered encryption, and keys are not stored off of the device, so they cannot be shared with law enforcement."
Besides generally making Android devices more secure when they are stolen or confiscated, the move should also make Android device factory resets more secure. A few months ago, Avast showed that Android's unencrypted factory reset didn't hold up to forensics techniques, making selling an old phone a security risk. Google's response to the story recommended enabling encryption before performing a factory reset, and now, for users, that will happen automatically.
Of course, the weak link in the law enforcement scenario for Google and Apple is cloud storage. Companies can and will turn cloud data over to the police, and Google has even done it proactively. Smartphones today have cloud backup systems for just about everything, so while this will probably protect you from individuals trying to snoop in on a stolen or resold phone, there's nothing to stop the police from getting a warrant for your cloud data.