The government says it just wants to unlock this one iPhone. But is it really just looking for a legal precedent in a case that the public is likely to support the unlocking?
Apple says is it afraid of creating a "master key" that could fall into the wrong hands. But doesn't it already have such a key, in the form of a signing key controlling what payloads the iPhone will agree to load? Is Apple primarily concerned with both precedent and perception of security on its phones?
I personally feel that any mechanism by which iPhones could be unlocked with a warrant -- but only with a warrant (ie. the gov't physically lacks the capability to do it themselves) -- is a good compromise. It's in Apple's interest to push back on such requests, so you have two powerful and well-funded entities adversarially fighting to define the line of what can get unlocked and what can't.
Now NSL's, those are a whole different kettle of fish.