My default hotspot password in iOS 7 right now is "min1bt3456mi" which is improved over what I recall was the default (along the lines of "foobar1234"). Hopefully the actual password generation is improved too.
On the other hand the standard passwords for the encrypted synced keychain are 4 digits. And then apple says it can't decrypt it. The option for longer passwords can barely be seen on the iPhone 4.