Does not seem to do as advertised deleting older backups to make room for newer ones
Time Machine will usually work OK if the Time Capsule is full and the new backup is a small incremental backup. But, Apple never told us that if the new backup is just a bit larger than normal, then Time Machine cannot delete enough data from the existing backup file to make room for the new backup.
About to get Samsung 2TB SSD and hook up direct via USB.
That should work very well and an SSD is certainly a better choice than a normal spinning disk. Unfortunately, the SSD will not back up any faster than a spinning disk since Time Machine backs up on the slow side of things.
Should I choose encryption?
Your call on that.
Does it cause unneccessary trouble?
No, other than backups will take about twice as long using encryption. The problem that most users have with encryption is that they forget the encryption password and cannot get into the disk later without the password. If you decide to go with encryption, be sure to write down the encryption password and keep it in a safe place.