I'm trying to restore my phone from a backup and it is saying my password is wrong. I never set up a password to encrypt the backup files. Anyone have this issue?

If the user never setup a password for the backup and is being prompted for one, that indicates the backup is corrupted. Delete the backup as it cannot be used without that password.

Encrypting an iPhone backup can be required by a profile installed on your phone if using an Exchange account. Read here about how to recover the passcode if you don't know it:

http://support.apple.com/kb/TS5162