Major Security Flaw in iOS 4.1 for iPhones
Three days ago, a MacRumours member found a huge flaw in iOS4.1 (Post Here)
This is confirmed working on both a non-jailbroken and jailbroken iPhone. Both running iOS 4.1
When you iPhone is locked with a passcode tap Emergency Call, then enter a non-emergency number such as ###. Next tap the call button and immediately hit the lock button. It should open up the Phone app where you can see all your contacts, call any number, etc.
This same flaw doesn't seem to be working in 4.2 beta 3 anymore. Also, it doesn't seem to work on older firmwares such as 3.1.x.
A video by an iPhone User demonstrating this flaw can be found here