.. I won't lose a blink of sleep over them using Apple products. This guy had to have physical access to the iPhone to crack it, and even then the iPhone did not start sending its data out over the Internet along with a virus payload that formed a massive botnet that crippled Internet bandwidth.
That is because they are completely different cases with completely different mechanisms to prevent them. You're talking about the ability to load a spambot or something on a mobile device. The encryption is there to ensure your address book is safe, your calendar is safe, any photos and other data are safe. Not to ensure the device does not run arbitrary code. The problem with the data encryption being crackable within an arbitrary length of time is a large issue, as it is meant to be protection regardless of where the device lies, in hands or not.
My understanding is that the encryption in the 3GS is not meant to prevent a user with physical access to the device from accessing the data
That is exactly the purpose of encryption.
enÂcrypt (Än-krÄpt)
tr.v. enÂcryptÂed, enÂcryptÂing, enÂcrypts
1. To put into code or cipher.
2. Computer Science To alter (a file, for example) using a secret code so as to be unintelligible to unauthorized parties.
http://dictionary.reference.com/browse/encryption
So yes, it is a major issue, as it circumvents what the encryption is meant to accomplish.
"And remember: Evil will always prevail, because Good is dumb." -- Spaceballs