The Electronic Frontier Foundation's staff technologist Peter Eckersley writes in "Why We Need An Open Wireless Movement" about the positive aspects of sharing your WiFi with your neighbors and passers-by and about the tragedy of the commons that is puts those of us who generously share our networks with the world at risk. He proposes future direction for protocol and hardware design that allow us to share while keeping our traffic private and while maintaining a minimum amount of bandwidth for our own use.
The problem that's really killing open WiFi is the idea that an unlocked network is a security and privacy risk.
This idea is only partially true. Computer security experts will argue at great length about whether WEP, WPA and WPA2 actually provide security, or just a false sense of security. Both sides are partially correct: none of these protocols will make anyone safe from hacking or malware (WEP is of course trivial to break, and WPA2 is often easy to break in practice), but it's also true that even a broken cryptosystem increases the effort that someone nearby has to go to in order to eavesdrop, and may therefore sometimes prevent eavesdropping.
It doesn't really matter that WiFi encryption is a poor defense against eavesdropping: most computer users only understand the simple message that having encryption is good, so they encrypt their network. The real problem isn't that people are encrypting their WiFi: it's that the encryption prevents them from sharing their WiFi with their friends, neighbours, and strangers wandering past their houses who happen to be lost and in need of a digital map.