iPhone 3.1: 2G and 3G does not officially support exchange encryption email
Apparently if you have an original iPhone 3G or 2G and use it for corporate business email you might not want to update to the new iPhone 3.1 operating system as there is some problem accessing Exchange email accounts due to the server-side encryption policy option being enforced reports tuaw.
However iPhone 3.1 on the iPhone 3GS isn’t having the same problem as it supports Exchange encryption. Before iPhone 3.1 basically the encryption policy went ignored, but now it is being enforced correctly older iPhone handsets without encryption support will not have access to Exchange services.
Of course the quickest way around the problem if you are experiencing it is to upgrade to the iPhone 3GS, otherwise you’ll need to speak with your friendly IT guy and bribe him to disable the encryption requirement.