It does not have wallet encryption feature. And the feature of later versions are largely useless because the malware can easily intercept the passphrase protecting wallet.
There are other benefits to wallet encryption. If perchance my USB-stick backup finds itself mislaid, I could be glad my wallet's encrypted. (TrueCrypt does the job though.) If one is truly paranoid about being keylogged one could input the passphrase using a virtual keyboard (Windows, Kaspersky...). Now the malware needs to be wallet-stealing, keylogging
and screendumping. Oh, and not intercepted by AV or firewall. Still, I wouldn't keep >>
BTC1.000 in a live wallet unless I had at least some intentions of actively using those funds imminently.