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Apple Encryption Question: I know if you have the iPhone 3GS or later version, an iPod touch 3rd generation or later version, or any iPad, the user can employ encryption to protect the contents. My question is specific, does any one know what bit encryption Apple uses?

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As per page 11 of the iOS Security Guide:

Every time a file on the data partition is created, Data Protection creates a new 256-bit key (the “per-file” key) and gives it to the hardware AES engine, which uses the key to encrypt the file as it is written to flash memory using AES CBC mode. (On devices with an A8 processor, AES-XTS is used.) The initialization vector (IV) is calculated with the block offset into the file, encrypted with the SHA-1 hash of the per-file key.

Emphasis mine

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