You should try and avoid encrypting everything in the database. At the very least you will have to figure out which fields are being used for searching, relations, sorting etc and leave those unencrypted. You have to consider layers of encryption based on who you are hiding the data from. It would also help if you are clear about the differences between one way hashing (MD5, SHA), symmetric encryption and asymmetric encryption.
Encrypting passwords in the database makes sense because it hides the passwords from the dba or anyone with the ability to query the db directly. Actually, passwords are not encrypted, they are hashed. This way you can never recover a password, you can only generate a new one.
Data that needs to be recovered will be encrypted, so that it can be decrypted. There are various algorithms for doing that and they have different attributes of strength and cost (in terms of processing time and memory). You should choose one which suits your purpose.
The thing here is that encryption and decryption need to be done in the application and not in the database. The reason for this is that at some point there might be an open network between the database and the application servers and any data transmitted between the application and the database could be sniffed.
In deciding between symmetric and asymmetric encryption, there are two factors. One is for how long does this information need to be kept secure. If it is a bid on an auction that is going to end in 2 days, you may use symmetric encryption, because it ideally will not matter if people figure out things after that. Credit card numbers typically do not have to be kept safe. If you are storing the expiry date and the ccv numbers of the card then those have to be kept safe, typically for years. In that case you have to use asymmetric encryption.
In encrypting the whole file system it is not the performance degradation that you have worry about mainly. As far as I have seen, it requires a person to key in the correct password when OS is booting, and that requires physical access, and persons who can be trusted to know the password staying as close to the servers as the SLA requires. In this it is like setting a bios password or a grub password. If you indeed encrypt your file system, make sure to verify this or find a way around it.