Apple's Smart Covers are pretty cool - they attach magnetically to your iPad 2, and you can lock your iPad's screen simply by "closing" the cover. Lift the cover off the screen, and your iPad wakes right up. Unfortunately, members of the German forum Apfeltalk ("Apple Talk") discovered a bug in how iOS handles the Smart Cover that makes it possible to bypass the iPad's passcode screen. Yikes.
To trigger this glitch, hold down the power button and wait for the iPad to ask to power off. When that happens, place the smart cover over the tablet. Next, take the cover off again, cancel the power down, and you're in - no passcode required.
The bug generally seems to affect iPads running iOS 5, but 9to5Mac has also discovered that the issue is present on some that are still running iOS 4.3.
It's bad news, but it could be worse: While someone may be able to get on to your iPad using this trick, they'll only be able to get at whatever app you happen to have open. And if you left off at the homescreen, anyone who triggers this glitch won't be able to open anything; they'll only be able to see what apps you installed (although they can be rearranged or deleted if a prankster so desires). Spotlight is also fully functional.
Luckily, Apple is aware of the issue and is working on a fix. And for the time being, you can make it so your iPad doesn't automatically unlock when you open your Smart Cover; that way, even if someone uses this bypass trick, they'll only be greeted with the passcode screen. To change this setting, Open the Settings app, tap General, and change the setting for "iPad Cover Lock/Unlock" to "Off".
Check out 9to5Mac's video explaining the issue.