Mark Gurman of 9to5Mac has discovered a major security flaw within the iPad 2′s Smart Cover unlock system. All one must do is perform the steps below on an iPad running iOS 5 and they’ll be taken to the homescreen without first inserting a pass code.
1) Lock a password protected iPad 2
2) Hold down power button until iPad 2 reaches turn off slider
3) Close Smart Cover
4) Open Smart Cover
5) Click cancel on the bottom of the screen
Here’s a video on how the process works:
Even though Apple will most likely fix this issue in iOS 5.1/5.0.1, disabling the Smart Cover unlock setting is a temporary way to stay secure.