Encryption can be circumvented. It's hard, but doable for a state, when it targets one high-value suspect. But if everything is encrypted, they can't go "big data" on it and collect everything about everyone: if proper encryption is generalized, spying doesn't scale anymore.
Big companies' ability to break the encryption between them an you is irrelevant: if they're the legitimate receiver of the communication, they can offer the plain text directly to governments.
The ability for a third party to break the secrecy between two individuals has a pretty good solution though, and that solution is local encryption + open source. It makes it very difficult for states to compromise the scheme, and every time they use this ability, they're at risk of having their exploit discovered, and going blind again. They'd only use information gathered that way for legitimate national security reasons, and will never show it in a court for instance. A discovered 0-day exploit in OpenSSL or GPG isn't as easily replaced as one in Flash player.
The biggest potential impact of Snowden's revelations is that now, any security scheme relying on trusting a third party companies has to be considered unacceptably weak, at least if you mind governments--or companies sponsoring politicians--reading everything you exchange.
TL;DR: encryption isn't the absolute weapon against illegal spying by governments, but it helps making it extremely difficult, expensive and unscalable. Which is good enough a reason to promote it in addition to political action.