Encrypting File System and users' Home folder?

If a laptop get stolen somebody who knows what they're doing can look at the cache of various programe. Examples include IE, Firefox and even Microsoft Office with its backup copies.

Once a user logs onto a machine, is all that stuff stored in the users home directory?
I'm about to upgrade a laptop to 7 Ultimate. She travels alot and sometimes has patient information and reports in her Documents folder. Sometimes she does banking and pays her bills online. I don't want somebody to grab the machine and take it to a Geek Squad reject and dissect the various caches sitting around unencrypted.

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