[timdoug]

For zeroing unused blocks, I can suggest zerofree: http://packages.debian.org/squeeze/zerofree

[gizmo686]

There description sounds like it is intended for use in Virtual Machines

[timdoug]

Well sure, but it's just zeroing free blocks; that's the same operation (with the same desired outcome) whether you're using the disk image in a virtual machine or as an encrypted loopback device.