You should encrypt passwords in the database - you can
decrypt them as required as long as you use some universal method
for the "key" that you can apply to everyone on your site. The
trick is the key and making sure it is something that never
changes, but is different for everyone and can be stored without
giving away what it might be PLUS having the key work with the
algorithm you decide to use.
encrypt(string, key[, algorithm[, encoding]]))
decrypt(encrypted_string, key[, algorithm[, encoding]])
Some databases (i.e. MS SQL) can also be setup to
automatically encrypt certain columns as well, taking the burden
away from the CF developer, but most hosters won't give you access
to that type of functionality.