Apple's Cynical Approach
The unfortunate consequence for any business that has standardized on iPhones for remote mail access is that if they have required on-device encryption the iPhone has been breaking their security guidelines since it was installed. According to Apple their only alternatives are to change their security policies to allow iPhones to store plain text emails or upgrade everyone to the new 3G S device.
What a crock. Not only that, the iPhone users apparently had to wait until after they'd been upgraded to even learn that this issue existed. I am so glad I'm not a corporate Apple user.
