Well, it is true that encryptions isn't necessary for everything, but it's better to be safe than be sorry. I know people who have stuff like portable Firefox on their USB drive, and I presume that they also have some passwords stored on it. So it is better to encrypt it all the time.
Even for projects, like William mentioned, it is better to encrypt them, because plagiarism in my school (any school for that matter) is a big issue and I personally know a person who had to go talk to a guidance counsellor because he plagiarized from my assignment (heh, I guess he couldn't resist
). And what if somebody steals the info about all your research done on those projects...?
So just to be extra sure I think it's better to encrypt any data on your usb flash drive, because you never know...