For local backups, compression is less of an issue; for things that are compressible, transparent file system compression seems to get about 110% the size of what I would get by any non-CPU bound levels of compression using a tgz. Since (as others in this thread have noted), compressible files tend to also be smaller files (the only exception I can think of would be if your log rotation doesn't compress old logs), the fact that only a fraction of what I backup is 10% larger is kind of "okay." When you're sending across the network though it can be a big deal.
For people who haven't dealt with this - a good encryption scheme produces output which you can't tell apart from a purely random stream of bits - it has very high entropy, and is therefore not compressible.
And this has some pitfalls as well, ciphertext in general has about the same length as the plaintext, so compression rate can be used to infer some information about the plaintext. It's more of a problem with interactive protocols than with backups, but still worth keeping in mind.
