No they don't. You don't send them the code, only the precompiled binary. They do use static analysis to look at which methods you call, but that's not hte same thing.
The question about encryption is regarding US law for exporting software with certain encryption mechanisms in. Nothing to do with the code of your app.
+1 for no
They cannot decompile your compiled app that you send to them and in no part do they ask for the code. Unless they asked for the code they can only do as others have said and check for the apps functions and calls to their API's and to check for memory leaks etc.
An app built using their SDK toolchain exposes all Objective C class names and messages, in plain text in the binary, for not only any iPhone UI and Foundation class use, but also for any classes and methods internal to your app.
And, not only Apple, but the cracking community is reported to have tools that allow them to disassemble compiled apps sufficiently enough to find and patch out anti-piracy code.