Apple claims that it has increased the security in the phone with the release of OS 3.0, but as the following videos show, the implementation is quite weak. Bewarned if you are going to watch the video though as it contains quite a lot of techie jargon (and not the easily understandable kind unless you have played around with UNIX or Linux before).
The first video shows the hacker easily cracking the passcode for the phone and retrieving supposedly encrypted data in just about 2 minutes!
The second video shows the hacker getting a complete unencrypted image dump of the iPhone, which is supposedly hardware encrypted. SQL statements and IP addresses are shown wizzing by in real-time as the dump is generated. If you thought the first video was already hard to understand, just take my word about the second as it's got even more jargon in it.
Don't think we'll be seing the White House issue Obama an iPhone anytime soon as Apple still has a way to go before it can challenge Blackberry in the enterprise space.
But I think for the average consumer, it's more than sufficient. Just don't store any naked photos of yourself on the phone...