Q:

Call Encryption

Is it possible to encrypt calls on Android OS?  
How do I do that? 

A:

Yes with an app called redphone: http://www.appbrain.com/app/redphone-beta/org.thoughtcrime.redphone

A:

Options are limited unfortunately. 

If you want to make calls using your existing phone service with your existing number, then your best option is Red Phone from Whisper Systems.  Of course, your calling partner will need to have the app to for the call to be encrypted. 
If you don't mind using another service, take a look at OStel, a secure VOIP provider.  

A:

Curently there is no such official support and the SDK does not allow third party apps to encrypt calls, but if you use a SIP client, the call can be encrypted depending on the SIP client`s features.