iPhone 3.1 Blocks Encrypted Exchange Email On Non-3GS iPhones
Under iPhone 3.0, users were able to use an encryption option to retrieve mail, although it wasn’t correctly encrypted. iPhone 3.1 corrects the problem by disabling access to encrypted exchange mail on devices other than the iPhone 3GS. This is because the 3GS is the only iPhone OS device that has the proper hardware requirements to handle the encryption.
Apple has responded to the issue today in a support article which recommends disabling server-side encryption for those devices.