“Because the problems began with the latest update, it may seem reasonable to assume that the update is to blame, but it’s not. In fact, everything is working exactly how it’s supposed to be, according to Apple,” Dalrymple reports. “‘iPhone OS 3.1 is working properly with Exchange Server 2007,’ Apple representative Natalie Harrison told CNET News. ‘We added device encryption information to the data that can be managed by IT administrators using Exchange Server 2007. The policy of whether to support iPhone 3G, in addition to iPhone 3GS, which always has on-device encryption, on Exchange Server 2007 is set by the administrator and can be changed at any time.'”
Dalrymple reports, “What this means is that iPhone OS 3.1 now properly identifies itself to Exchange 2007 as having hardware encryption, and that’s what is causing the problems for iPhone and iPhone 3G users… If you use the new iPhone 3GS, you won’t notice any change. Apple’s newest phone is equipped with hardware encryption, so it will meet the requirements of the Exchange server when identifying itself.”
“If you already upgraded to iPhone OS 3.1 on an iPhone or iPhone 3G and connect to an Exchange 2007 server, you can ask that the IT admin turn off the hardware encryption requirement for those devices,” Dalrymple reports. “Company IT administrators who require hardware encryption to access Exchange 2007 will need to decide whether they want older iPhones to access their servers. If so, they will need to configure Exchange to not require encryption from the iPhone and iPhone 3G.”
More info in the full article here.