You probably do not want to try encrypting largish files all at once, to save yourself RAM. You can look at Crypt::CBC which allows you to encrypt a file as you read it without needing to worry about the encryption algorithm's blocksize and without needing to keep it all in memory. (With Crypt::CBC you can use Twofish, Blowfish, DES, and IDEA, at least.)

The key for any of these encryption algorithms is usually just random data. You are probably better off using a key composed of random data, since it will probably be longer and more random (especially since non-printable characters would be included) and thus harder to brute force. But, a password should work.