The big fear is that pissing off LEO will result in harmful regulation, and, while that is certainly possible, history has shown the technology moves forward regardless. Consider the US trying to prevent the spread of cryptography. They lost that battle[1], and any government who picks a new battle will eventually lose it, too.
1. The only injuries in that battle were US companies trying to sell software overseas because they were forced to include sub-par crypto.
The enhanced encryption is Apple's way of saying that it's not their problem if LE has a beef with you. It removes Apple from the equation. If LE starts knocking at their they can say that there is nothing they can do.
It reduces warrant less spying, and removes some of the ease with which LE agencies have been able to operate. LEA agencies can collect data with broad strokes anymore, they'll need warrants (which they should have needed in the first place and they will have to conduct targeted investigations now (which is what they should have been doing all along).
in something as sophisticated as an iphone there are lots of places for vulnerabilities to be hidden from view.