Remove FileVault before installing Lion?

I've been wondering the same. My wife and I both have FileVault enabled on our home folders on our MacBook Air.

 

I would remove it first. It might prompt you to do so. When I tested I did not have it enabled first.

 

You might want to apply whole-disk FileVault 2 after the install, so makes sense to remove FileVault 1 first anyway...

Better safe than sorry ...

Sounds like FileVault 2 can encrypt a live disk in the background, which will remove the pain of applying it ...

FileVault 1 required as much free disk as you were encrypting, so if FV2 is the same (I suspect it isn't) then that might be a gotcha to watch out for; if you are low on free disk space, you may not be able to turn FV1 off / FV2 on (if FV2 has the same free disk requirements)

 

I decided it's better safe than sorry so I turned it off (after trying to find 7 GB of files to clear up space).

Now to try installing Lion.

 

It looks like it wasn't actually necessary, as Lion will hold onto your old FileVault settings for encrypted home folders. You just can't encrypt other non-encrypted home folders, and it looks like you have to turn FileVault off for encrypted accounts if you want to use FileVault 2 to encrypt the whole disk.