As said you want to use TrueCrypt.
I work in the IT Department in a college and the software you get with these pendrives is not encryption. If you can use some tools to view the contents easy. With TrueCrypt you cant do that it is encrypted and hard to crack. The only problem with TrueCrypt is that you need to install it on every computer you intend to use the drive on. The good thing its compatible with Mac, Windows & Linux & its 100% free!
I use it and would recommend it.