Rossen Report "Apple picking" error?

[sclawis300]

On the Today show this morning Jeff Rossen did a report about people stealing iphones while you are using them. He said that the worst part is that they can reset your password because the phone was in use. I am pretty sure this is dead wrong but I did notice something interesting. You can change the "auto lock" setting to never without having to enter a password.

Seems like a security oversight by apple to me. What do you guys think?