First, the security problem. Enterprise customers have been reluctant to adopt the iPhone until they were assured its security was on par with other smartphones, and news of an easy exploit isn't quite the assurance Apple could have used. As it turns out, if you pick up an iPhone running the most recent OS (2.0.2), and it has a pin-number required for unlocking, you can hit the button for "Emergency Call" and get a lot further than you'd think. First of all: not only can you make an emergency call, but you can call any number you want. If you're in Emergency Call mode and you double-tap the home button, however, you'll get access to the phone's favorite numbers, which can, in turn, allow you to access the address book, which can, in turn, allow you to get into Mail, Safari and Maps. Uh-oh. That's a pretty big breach.
But that's got nothing to do with Apple's false advertising woes. In the UK, the Advertising Standards Authority has banned the Apple ads that feature a user's finger browsing with Safari, because the phone cannot, as it claims, access all parts of the Internet. In fact, the device doesn't support Java and Flash, which are admittedly pretty important, but probably not crucial enough to warrant the UK's actions. Back in the US, a woman is filing suit over another function of Safari -- the unexpectedly low 3G speeds. She's seeking class action status, and might just get it. If Apple doesn't get back on the horse quickly, it could have 10 million very disgruntled iPhone owners on its hands, and that will get expensive.