Hi Jason,
My guess is that encryption of data for the transfer between the database server and the web server (or the other way) may or may not be required depending upon whether the database is local or remote.
If the database server is on the localhost, then encryption is probably not required. If the db server and webserver are on the same intranet, encryption may be required. If the db server and the web server are in different facilites, then you should encrypt.
If you have mcrypt installed with PHP, then 2-way encryption is pretty straight-forward. Similarly for PGP/GPG. You might as well encrypt the info before it leaves the secure server.
Doing the encryption in PHP will also mean the your data is stored encrypted (which is probably a good thing is you're concerned about the information).
Rob