The bad thing is that this password is set to the screen lock PIN / password. So you either set a short password or PIN, that you can enter quickly each time you unlock your phone from sleep (but this provides weak encryption), or set a long password and have to type it 20-30 times during the day.
This stupid behavior may be fixed easily. Android provides command-line tool called 'vdc', an interface to Android Volume Manager. As written in "Notes on the implementation of encryption in Android 3.0" , it has a command 'cryptfs changepw', that allows changing encryption password. Of course this command must be executed as root.
vdc has some other commands related to encryption, one of them is 'cryptfs verifypw', that allows to validate the supplied password.
I'm currently writing an application that will assist user with changing encryption password. This is my first public application for Android. You can find a source code on GitHub . It is very simple, but maybe android gurus here may find what to make better.
Comments and pull requests are welcome :)
 http source.android.com/tech/encryption/android_crypto_implementation.html
 https github.com/kibab/encpasschanger