Actually, in practice encryption was a big deal and widely used two decades ago, which is one of the reasons that there was a big controversy then over the government's last effort to regulate encryption (at the time, it was largely about it export, and for the convenience of the NSA rather than domestic law enforcement, but the debate was remarkably similar.)
Yes, technically illiterate people were using encryption without realizing it (or even knowing what encryption was) in the 1990s, both for files and other data at rest and for data in transit (e.g., via HTTPS.)
Certainly, the details of where and how encryption is commonly used has changed, but the substance of the debates over government encryption policies haven't changed much at all since the Clipper Chip and encryption-as-munition issues of the 1990s.
