This reminds me of one of the points in the End-to-End Argument by Saltzer. The network protocol offering to encrypt the payload is broken, because the two end clients should undertake to secure their communication if it's necessary. In this case I have some sympathy though, because it's not easy for two humans speaking with their voices to come up with a way to encrypt it. Maybe the responsibility should fall on the local code running on each phone?
Of course, I know close to nothing about radio security, so maybe the world as it exists today is optimal but the phone makers blundered in ignoring the insecure warning?
As far as I understand the issue in this case is not the lack of end-to-end security, it is that it's possible to trick the phone to tranmsit without encryption for regular calls. Non-encrypted calls are needed because it is important to allow making emergency calls (e.g. 911) without a SIM being present or without a PIN number and it's the SIM card that has the encryption key, not the handset.
Most phones do issue a warning if ciphering isn't enabled. On some you may be able to force it to require it. But keep in mind that this is only applied on the radio interface anyways (and GSM encryption is so broken you shouldn't be relying on it anyways). If you want end to end encryption of your calls you will need to use encrypted VOIP over your data connection.
http://web.mit.edu/Saltzer/www/publications/endtoend/endtoen...
Of course, I know close to nothing about radio security, so maybe the world as it exists today is optimal but the phone makers blundered in ignoring the insecure warning?