Caboodle uses the standard Blowfish algorithm for encryption. There are no known exploits of Blowfish, so it should be plenty safe, provided of course you choose a password that people couldn't easily guess.

To quote Wikipedia:

Blowfish is a keyed, symmetric block cipher, designed in 1993 by Bruce Schneier and included in a large number of cipher suites and encryption products. Blowfish provides a good encryption rate in software and no effective cryptanalysis of it has been found to date.

Read about Blowfish on Wikipedia.