Encryption isn't a solution. In fact, encrypted IM may actually send some flags flying since most normal people don't encrypt their IM messages. Only terrorists, criminals, and pedophiles do such things.
Unless you have something to hide, even if you have something to hide, don't ever use encrypted IM. It just attracts loads of attention.
If you want to circumvent eavesdropping, have a look at steganography. It is basically hiding information in plain sight. Definitely much more secure than merely encrypting your IM messages, IMHO. Encrypt a message in some image (JPEGs do nicely), and send them to your friends. Unless they know to look, the message is very unlikely to be found.
Of course, this works well for emails. For IM perhaps something similar could be done if people were paranoid enough...
