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Can I store unencrypted personal data in sql server and avoid identity theft?

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My website will go live soon.  Once concern I have is that I am storing personal data about users - at minimum their email address and first and last name.  

It gets worse, due to a colleagues insistence that our website has to make a profit, he wants this feature: In case user A wants to pay person B to watch a video/slideshow/text lecture of his, then we have to store person B's Paypal email and the amounts owed to that person.  In fact, we also have to store enough info to pay refunds, in some instances.

Moreover, our site has optional questionnaires that some users design for other users, and we have no control over the questions that would be asked.  A user might ask for sensitive questions such as "birthday", "place of birth","father's original country "- you name it, they might ask it.  and we would be storing those answers too.

I could put an encryption algorithm in my code, and encrypt everything that goes to the database, but then if my code is compromised, all the data is compromised too.  And anyway, I have web-pages that display the answers to the questionnaires (though I did make an administrative option to hide people's names from web pages).  As far as the emails go, I have to be able to send emails to users, and sometimes to search on an email).  So that complicates encryption for emails.

There is a requirement that the data be protected - I forget where I saw it - and one way is to encrypt the entire SQL database.  But I can't do that at present, because I use a host provider without a SQL-Server database dedicated just to me (my funds are too low to pay for dedicated servers etc).

Can anyone point me to a simple list of requirements that I have to meet?  They probably would not just be the PCI requirements of credit card companies - since I use Paypal - though I would have to meet some minimal standards there too.

Thanks.

-- G


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