Never mind that none of this matters if you have unlocked the phone and it's on (default protection policy is protect until first unlock, which happens right after turnup). That's gotta be 99.9% of cases. Once the police or apple have a locked phone, all bets are off. Apple can just install an app remotely that gets them past the lockscreen, and unless this is from a cold boot, you have access to all apps and all data. This includes access to e.g. The logs of any configured skype session, the company mails ...

Add to that the usual closed software problems. Apple says they don't have a specific backdoor anymore (!), and they won't let you audit anything.

In particular Apple provide photo backups and (speculation) may be doing something server side to allow continuity features around text messaging from other devices.

This is getting into speculation about their role in Prism but I'm wondering how the iCloud encryption actually works. They say everything is encrypted while stored [0] but it's not clear (or I haven't found) whether that's using a key derived from the password or something Apple control. Either way I'm not entirely sure there's any way to stop Apple getting it if they're told to given the lack of transparency.

[0] http://support.apple.com/kb/ht4865