Tips to remember it here:
http://support.apple.com/kb/TS5162
If the backup you're trying to restore from is encrypted, you will not be able to use that backup if you can't remember the encrypted backup passcode.
If on a Mac, & you elected to save the passcode to your Keychain, you can recover the passcode from your Keychain. Otherwise, your backup data is unrecoverable.
While you can continue to sync/backup, if you can't remember it & want to remove it, you'll have to delete your existing backups, & restore your phone as a new device. Your data will be unrecoverable.
You delete your existing backups here: iTunes>Preferences>Devices.