The exploit obviously requires a fair amount of technical knowledge, and thus shouldn't be an issue for the vast majority of users whose devices become lost or stolen.
I'm sorry, but this comment is completely ignorant.
The process demonstrated in the video can be automated very easily, and it is only a matter of time until someone can be bothered to write a simple toolkit to steal passwords off an iPhone, just like you have easy-to-use WiFi password scanners and Trojan toolkits.
The reports also says that the passwords within the new iOS 4 password storage were not retrievable. It's up to the app developer to use it. Apparently not even Apple thought it would be necessary to store important passwords there. What ignorance. While the password for regular POP3 accounts IS stored safely, the Exchange passwords are not. This lack of rational thought and wrong prioritization in terms of security and vulnerability is typical for Apple, at least has been for the last years. I bet they will completely ignore this story too.
It's time they really step up their game.
Independent research shows that OS X has a bad security model and Apple's policy of handling security flaws is unprofessional. They have been lucky simply because hackers deem the Mac too uninteresting. Unfortunately, this kind of sloppiness can be found in their iOS department too.
They can't rely on being a small target forever, especially in the smartphone market. It's obvious that smartphones will be the "next big thing" for hackers. Apple better strengthen their security and rethink their priorities before the onslaught of attacks will start.
Otherwise they'll end up as the Microsoft of smartphone OSes. MS had a hard lesson to learn and they made the exact same mistakes Apple is making now by relying on security-by-obscurity and the assumption that only a few professionals can exploit holes.
Their walled garden approach will make it harder for attackers, but by far not impossible. iPhones can be jailbroken simply by surfing to a website, and similar exploits can be used to do pretty much anything on your phone. It would be foolish to think that apps are the greatest danger when browser exploits are everywhere on the Windows platform.
So Apple, do your effing job and invest some of your cash pile to shift your priorities, create a decent security model and improve your reaction times.