Is there a performance advantage to un-checking it?
yes there is a bit of overhead as OS X has to decrypt and encrypt on page in's outs. Although you computer can easily handle it.
Could this have anything to do with the problem I am experiencing, which is that I lose space on my hard drive all the time, and I can't restore it until I restart my laptop. I usually lose about 1 gb in an hour so. I am desperately trying to figure out why.