It's simply a matter of your required level of security. The goal of using google-docs... is not to distribute them via email... but rather distribute a link to the file in the cloud. You can add additional users to the documents as viewers only... and remove them at any time. Encrypting documents using the built-in password protection really isn't very secure either. (I have tools that can break the passwords in a few minutes)
Why do you need password security when the owner/admins of a document can pick & choose on-the-fly who can view & who can edit the document? Instead of a "global password" the users' accounts become their "password" to access the documents.
If you don't trust google with your documents... you probably shouldn't trust sending documents via email either.
Giving edit access to Google Drive documents is sufficient. The way these files work, once they are shared with a user, the file will appear in their "Shared with me" list
If they remove or delete a file from this list, it will not remove the document from any other user's list, nor will it destroy the file. Only the owner can trash a document.
Learn more about trashing documents here: http://support.google.com/drive/bin/answer.py?hl=en&answer=2494934&p=restore_trash_collab
If the owner trashes a document, they can get it back from their Trash folder:
Learn how to recover a file or folder that you moved to the trash.
If something in Google Drive is moved to the trash, you'll see a
warning and you may lose access to it at any time. Read one of the
following sections to learn how to restore it to your Google Drive
from the trash. When you restore something, it'll be recovered in
Google Drive on the web, to the Google Drive folder on your computer,
and to your mobile devices.
If the item is in a folder, you’ll need to restore the entire folder
to recover any individual items inside of it.
Owners
If you're the owner of something and you’ve placed it in the trash,
you'll see a warning that reads "This item is in your trash" when you
open the doc or file.
If you’d like to restore a doc or file to your Google Drive:
Search for it in the Trash. Select the file(s) or doc(s) you’d like to
recover. Click the Restore button.
Folders and file structures behave the same way, if regular editors remove these it will disappear from their "Shared with me" list but it only affects them, not the rest of the collaborators.
Best Answer
You can use Google Cloud Connect to have Google Drive act like a backup of the files that you open in Microsoft Office. It automatically syncs with Google servers whenever you do a save, so you can be assured that your documents are safe online in the cloud.
This plugin also allows you to open Google Drive documents in Microsoft Office, so that the environment where you edit documents stay the same. The only problem is that Google Documents format isn't supported.