PROBLEM...
Apple's Smart Covers are pretty cool--they attach magnetically to your iPad 2, and you can lock your iPad's screen simply by "closing" the cover. Lift the cover off the screen, and your iPad wakes right up. Unfortunately, members of the German forum Apfeltalk ("Apple Talk") discovered a bug in how iOS handles the Smart Cover that makes it possible to bypass the iPad's passcode screen. Yikes.
To trigger this glitch, hold down the power button and wait for the iPad to ask to power off. When that happens, place the smart cover over the tablet. Next, take the cover off again, cancel the power down, and you're in--no passcode required.
SOLUTION...
Apple is aware of the issue and is working on a fix. And for the time being, you can make it so your iPad doesn't automatically unlock when you open your Smart Cover; that way, even if someone uses this bypass trick, they'll only be greeted with the passcode screen. To change this setting, Open the Settings app, tap General, and change the setting for "iPad Cover Lock/Unlock" to "Off". (more)