I don't know enough about biology to comment on their storage-density claims, but as to the encryption, I'm getting a strong whiff of snake oil from "only the client would know the function to derive the checksum". If you want to convince me that bioinformatics has something to offer cryptology, then you need to explain to me what property wetware has that silicon doesn't which causes it to be unlike a classical Turing machine.
Also interesting: they contributed their technique to the BioBricks Foundation: <a href="http://bbf.openwetware.org" rel="nofollow">http://bbf.openwetware.org</a><p>Very exciting things coming as we get the protein expression laws down well. I can't wait to use <a href="http://mrgene.com" rel="nofollow">http://mrgene.com</a> to sequence DNA and a BioBrick Assembly kit to put it all together.<p><a href="http://www.neb.com/nebecomm/products/productE0546.asp" rel="nofollow">http://www.neb.com/nebecomm/products/productE0546.asp</a>
I have to admit that I think that the grand prize winner Slovenia brought up in my perspective a really simple but genious idea to the competition. Which might be a lot more worth discussing :)