TUAW: According to Apple’s own support documentation, iOS provides data protection on all devices that offer hardware encryption — specifically the iPhone 3GS and later, all iPads, and the third-generation iPod touch and later.
By adding a passcode to your device, data protection “enhances the built-in hardware encryption by protecting the hardware encryption keys with your passcode” and “provides an additional layer of protection for your email messages, attachments, and third-party applications.” According to security researcher Andreas Kurtz, however, iOS version 7.0.4 and later — including 7.1.1 — has a bug that results in attachments not being encrypted.