Exchange Encryption Problems
Owners of the original iPhone or iPhone 3G (but not the iPhone 3GS or the iPad) who connect to Exchange servers may encounter a frustrating problem due to the fact that some Exchange 2007 servers require hardware encryption but these older iPhones don't provide it. (Prior to iPhone OS 3.1, older iPhones incorrectly claimed to support encryption, which let them connect to such servers—but only under false pretenses, as it were.)
Note
The suggestions here are adapted from Stephen Foskett's article "The iPhone Exchange ActiveSync Guide" at http://blog.fosketts.net/guides/iphone-exchange-activesync/.
The ideal way to solve this problem is to switch to an iPhone 3GS (or newer iPhone model). If such an upgrade is out of the ...