It's not the encryption...
It's the fact you've got to use iTunes (or the stripped-down derivative) to activate and sync the bloody things.
It's the only phone we've ever seen that has such draconian activation requirements out of the box. Worse yet, you can't get them activated by the carrier and sent out to you, and I'm not about to go stand in a queue at a phone shop with a trolley of these things to get them done by the monkey behind the counter.
If Apple are serious about supporting enterprise they have to be willing to accept that a lot of system owners aren't going to want to install iTunes on their corporate networks.
As for encryption, you can only tether the devices to one machine at a time - if you try and plug in to another copy of iTunes it won't let you copy to or from the phone without wiping it first. Beyond that the thing is DRM'd to kingdom come.
I own one for personal use and I'm in agreeance that it's a bloody brilliant piece of kit, and great fun to use. But it's no WinMo or Blackberry when it comes to rolling them out in enterprise. And Apple's support has been less than stellar on that mark (unless, seemingly, you're either a funky startup or worth some marketing mojo to Apple's spinmeisters)