xfs shouldn't make a big difference. ext3 is used with a flag (largefile) to maximize space usage for a low number of files.
If time and space permit, a full backup is easier to handle. With incrementals, you have to swap disk before the full is run. Trying to restore a single file from a past date, you have to supply the right disk.
I have a 2 disks setup, where both disks contain the same data: one disk is always attached, but mounted only during the backup. The second disk is nearly always off-site, but when is plugged to NethServer, data from the first disk is immediately mirrored to the second disk (and an email signals when the copy is complete).
I agree that encryption would be a useful feature, I fear potential data loss in case of lost key.
Note: we use duplicity, not duplicati.