PGP takes a little getting used to. Give people a mail program with encryption transparently built in, and I think they’d use it all the time with people they email with regularly.
Enigmail is a great plugin for PGP/GPG. Works really well and is fairly seamless. There are others that work with it as well. The basic problem is first of all, that people dont understand encryption. They especially don't understand public-key encryption. Secondly, people are lazy, and despite what they say about wanting privacy, they just don't want to have to do anything or accept any responsibility for securing their life.
There is no reason why the vast majority of person to person email should not be encrypted today, other than ignorance and laziness. I digitally sign most of my email, but can't actually use encryption because it takes two to tango.