If you don't have something like a lock code it is pointless because then you have nothing to lock the encryption with.

The iphone works with its lock code.

This is not what's under debate here.

Without device encryption, encryption of the passwords is useless, given root access, since the key is somewhere on the device as well. If anything, the only crime here is not using access tokens but storing the whole password.

With device encryption, the situation changes slightly. Unlike iDevices, most (all?) Android phones don't come with a hardware encryption chip, so, given a vulnerable bootloader, full-device encryption doesn't do much in the way of security. Under a secure bootloader, device encryption should be secure as well.

The problem is, I want my phone to be able to authenticate with way more than just Google services.

And I want it to be able to do that in a way which doesn't require me to remember several dozen secure-against-2012-vintage-password-cracking-techniques.

I _know_ that sometime in the next year or two we'll see another password leak like, say, LinkedIn's recent one - so I know I need to use 12+ "upper, lower, number, and 'special'" character non-dictionary passwords to ensure I'm not trivially exposed by rainbow tables or gpu crackers.

A quick count on my phone just now, there's at least 33 different services my phone "remembers" it's login for. Some of them use OAuth-style authentication (Twitter and Flickr, for example), and some (Google, Facebook, and Amazon) are 3 factor auth protected (but, against a rooted phone that wouldn't help much, since I'm using the Google Authenticator app to generate the auth tokens, if my phone were under someone elses control they could watch me using and unlocking the authenticator app...)

But there are still dozens of services - email accounts, websites, web service backed apps - that require the phone to have access to the cleartext password, either from me remembering it and typing it in, or from it's own storage mechanisms - secure or not.

My phone would be _remarkably_ less useful to me if it didn't store passwords, or only worked with services that didn't require password storage.

Yeah, Google would never ship software where "Password is stored on disk in plain text" https://code.google.com/p/android/issues/detail?id=10809#c48

When you properly encrypt server passwords, they are not supposed to be decrypt-able. Whereas, this is supposed to be a two-way encryption as you need to access the raw data. Ergo, any form of encryption you can do can be easily undone and thus rendering your efforts moot.

http://en.wikipedia.org/wiki/Salt_(cryptography)