Another security flaw with the passcode lock has been discovered in the iPhone 2.1 firmware. Thankfully this flaw isn't as major as the last one discovered.
iClarified contributor Mateen has found that if you enable the passcode lock and disable SMS preview, your messages could still be seen!
To duplicate this flaw just go to your settings and enable passcode lock. Make sure to turn off SMS preview. Now sit at the Emergency Dial screen (the only one you can access without the password) and wait for a text message to come in... Surprise! You can read the entire SMS!
Not a major issue but definitely one that should be addressed...
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Another problem I noticed with 2.1 is that after installing BiteSMS (via Cydia or Installer), none of the apps installed via AppStore would work. Deinstalling BiteSMS allows them to work again. Perhaps another version of BiteSMS would be coming out soon?
Why am I not surprised.....
I was just explaining to someone the other day looking to update to a new firmware to fix some bugs, and I told them it might fix some bugs, but it's also just going to create more. And I know quite a few people who wont be willing to upgrade to 2.1 because this bug. The disablement of the SMS Preview is quite critical for those texting sensitive data.