Mail and encryption

My employer is currently considering blocking iPhones, due to the fact that mail is not stored in an encrypted format on the iPhone. Or so they claim.

This would basically remove MS Exchange support.

I asked about using Safari to access mail and if this would be an issue, to which I was informed "no" as "it stores the data differently". A little vague I thought!

So is there anyone who knows about mail and if there really is a security issue due to there being a lack of encryption (I thought 3.0 had fixed that)? Or if Safari is any more secure?

Any thoughts/comments are greatly appreciated.