Encrypting passwords is little better.
Passwords should be hashed (and salted) using a robust one-way algorithm.
I think that's what's generally understood by password encryption: I imagine it's been a long while since any password system used a reversible method. Although I'm not particularly familiar with this forum's back-end, I would imagine that the confirmation emails that are generated are done so at the that time using the password as entered on the registration form by the user before it goes through its one-way hashing and the original discarded forever. The plaintext password isn't necessarily being stored anywhere, although sending it through unencrypted email is obviously less than ideal.
I'd never place my trust 100% in one-way encryption, though: not enough to consider password reuse to be safe and viable. I remember when Unix's DES scheme was considered so unbreakable it wasn't even considered necessary to keep the passwords out of public view... which obviously went well.
