Public_Domain Public_Domain:
Though frankly I wouldn't be stunned if some guy somewhere could break into an ecrypted iPhone.
Any device that encrypts data in a 'secret' manner must have the encryption key stored locally. Any system, such as a website that encrypts traffic between two points, shares a key between those points.
If the key is local, as in the case of a phone, then all it takes is sorting through the memory of the device to find the key. Easy sounding, hard to do. But because the key is local, then it's retrievable. That's the same way DVD and Bluray encryption were broken.
The method that many think they are using to break the phone is to make a virtual copy of the phone, and brute force the thousands of possible passwords. Then they can either replace the bit of code that would 'brick' the phone with code that won't brick the phone, or restore another virtual copy of the phone's memory and keep trying.
The really brute force approach is to shave the back of the integrated circuit off (or use acid if it's ceramic), put probes on the chip and find the place the password is stored. But that's generally for custom made or ASIC chips.