My solution was to use simpletext.ws, since the source is available I can use my own server to sync notes in my local network without having to worry about encryption. And on the iPhone I use the WriteRoom app to search and edit notes.
(As this is my first time using any stackexchange site I'm not sure if I should include this in the original question or answer it myself... apologies in case I'm not following the proper way of using the site.)