I am aware of HashKnownHosts, but is anyone actually using it?
As far as I can tell it's not on by default in Fedora 9. It's kind of an annoying feature, if it were on I'd probably turn it off. The increase in security is minimal due to the existence of bash history.
The reason users don't encrypt their ssh key is because they don't want spend their lives typing passwords over and over again. Since in *theory* a users SSH keys should only be on a system they are sitting at (further intermediate hops should be handled via ssh-agent) it may not be unreasonable to use some pam/kernel_keyring integration so that the ssh key is at least encrypted with some derivative of their login password.