What encryption does Electrum use for private keys in wallets?
Electrum uses AES-256-CBC to encrypt wallets.  The key is sha256(sha256("your password")).

Electrum wallet source:
https://github.com/spesmilo/electrum/blob/master/lib/wallet.py

slowaes library:
https://code.google.com/p/slowaes/source/browse/trunk/python/aes.py