From the Register:

Leicester City Council has misplaced a USB stick containing personal details of 4,000 vulnerable and often elderly users of its care service.

The data has disappeared from LeicesterCare, the council's vulnerable residents' support service. Along with personal information, the stick also has key codes for 2,000 people, which are used to open boxes outside users' houses which contain their front door keys...

This is just one example of the type of sensitive information that users tend to store on their USB sticks.  Then the sticks get lost on the bus, in the car park, or at the dry cleaners.  The safest course of action is to use mandatory encryption that employees can't turn off or bypass.