Dropbox encrypts each of the steps - your PC to their server, their server to their storage, their storage back to your PC/phone/etc. That's very different from user-controlled encryption, where you've got the keys, Dropbox only ever gets cyphertext (which it might wrap another layer around for extra security), and if the FBI hands them a warrant, they've got nothing useful to hand over.
It's somewhat of a business model problem for them, though - if they want to start adding lots of extra features, like Evernote's conversion of data between formats (OCR scanned pictures, read email via text-to-speech, etc.), they need access to the plaintext, but I have no intention of outsourcing my plaintext.