Leaving BTC unencrypted on a device you practically throw around across countries, tables and pockets -- one must be ready to loose them, no? Isn't the whole POINT of BTC to use crypto for security instead of obscurity?
If you people really are concerned, go to Cyanogen and improve security of the OS, e.g. easy full encryption + Password on both internal and exchangeable memory, replacing the insanely broad file system permissions.
Otherwise, you might persuade the police to be nice, but then a thief takes your phone --> epic fail.
I think the fact you have as much respect for the cops as thieves bout says it all ...
.... they are meant to be working for us, not rummaging through people's private user-space on nothing more than a whim or some arbitrary drag-netting operation. And why so secretive and stone-walling with the ACLU request? If they are not doing anything wrong, what have they got to hide ....?