Dropbox deduplicates the files that its users have stored online. This means that if two different users store the same file in their respective accounts, Dropbox will only actually store a single copy of the file on its servers. The company does in fact have access to the unencrypted data (if it didn’t, it wouldn’t be able to detect duplicate data across different accounts). If you value your privacy or are worried about what might happen if Dropbox were compelled by a court order to disclose which of its users had stored a particular file, you should encrypt your data.”]
Source: http://paranoia.dubfire.net/2011/04/how-dropbox-sacrifices-user-privacy-for.html