Well, first of all, it will be very difficult for someone else to break into your iOS device if you always have it with you. Failing that...

....the article at the end of of this message details a vulnerability you might like to weigh if you don't have the SETTINGS > PASSCODE LOCK  enabled and the ERASE DATA option of that setting set to ON on your iOS devices. With these settings enabled, your device will be wiped after 10 failed attempts to unlock your passcode leaving only a 1 in 1,000 chance of the device being unlocked via the passcode lock
OR

...someone attacking your iOS device also has prolonged access to unencrypted data on your personal computer. Perhaps you've already read "How to create a password-protected (encrypted) disk image in Mac OS X 10.3 or later" - http://support.apple.com/kb/ht1578

Finally, don't forget FIND MY IPHONE (http://www.apple.com/mobileme/features/find-my-iphone.html). Enabling this service, in the event of your losing your iPod Touch, iPhone, or iPad (or if it's been stolen) will allow you to:
- Locate your iPhone or iPad on a map
- Display a message or play a sound to help you find it
- Set a passcode lock remotely
- Protect your privacy with Remote Wipe - wipe your device completely

....and you can set up this service for free: Learn how to get Find My iPhone, Find My iPad, or Find My iPod touch free.

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...from:
http://www.itworld.com/security/168239/russian-company-cracks-ios-4-hardware-encryption



Russian company cracks iOS 4 hardware encryption

How the company makes the technology available only to law enforcement and government officials remains unknown

By John E. Dunn, IDG News Service |  Security Add a new comment

Having cracked Apple iPhone backups last year, Russian security company ElcomSoft appears to have found a reliable way to beat the layered encryption system used to secure data held on the smartphone itself.

Since the advent of iOS 4 in June 2010, Apple has been able to secure data on compatible devices using a hardware encryption system called Data Protection, which stores a user's passcode key on an internal chip using 256-bit AES encryption. Adding to this, each file stored on an iOS device is secured with an individual key computed from the device's Unique ID (UID).

Apple products containing this security design include all devices from 2009 onwards, including the iPhone 3GS (which can be upgraded to iOS 4), iPhone 4, iPad, iPad 2 and recent iPod Touch models.

ElcomSoft has not explained how it hacked the hardware-stored key system in detail for commercial reasons, but the first point of attack appears to have been the user system passcode itself as all other keys are only vulnerable to attack once the device is in an unlocked state.

The company said it had been aided by subtle weaknesses in the security architecture used by Apple, starting with the default passcode length of 4 digits. This yields only 10,000 possible number variations, which the company said most users would likely use to secure their devices without question.

The only limitation in breaking this key using a bruteforce attack was the need to run through the possible combinations on the iPhone or iOS device itself, which took between 10 and 40 minutes, far longer than would have been the case using a desktop PC.

If the passcode was too long to bruteforce, the company said it was possible to bypass this by hacking what are called "escrow keys," which are created by Apple applications such as iTunes and stored on a user's computer.

Given that the company's hacking of Apple devices began last August with the news that it had found a way to beat the encryption on iPhone backup archives stored on PCs, this could be how the company first spotted the weakness in the iPhone Data Protection system.

"We are responsible citizens, and we don't want this technology to fall into the wrong hands," said ElcomSoft CEO, Vladimir Katalov. "Therefore, we made a firm decision to limit access to this functionality to law enforcement, forensic and intelligence organizations and select government agencies."

The company has updated its Phone Password Breaker software to include the ability to "decrypt iOS 4.x file system images, as well as an optional tools to obtain file system images of the iOS 4.x devices, extract keys required for image decryption, and brute-force passcode," a note on its website said.

A license for this can be purchased for £79 (US$128) with the iOS 4-cracking feature enabled only for customers that meet the stated requirements. How ElcomSoft verifies a customer's credentials is unclear. All buyers of the software have access to the feature that cracks Apple iPhone and BlackBerry backup archives

ElcomSoft has gained a reputation in the last three years for cracking encryption systems used in a variety of technologies, including the digital camera image verification systems used by Canon and Nikon, WPA2 wireless security, as well as a range of individual applications.