A new virus attacking jailbroken iPhones is the most serious to date, turning infected iPhones into zombies and joining them to a botnet.

Two weeks ago the first ever iPhone virus appeared, changing the wallpaper on infected phones to an image of 1980s pop star Rick Astley. However, aside from gobbling up bandwidth and Rickrolling iPhones, it had no additional criminal intentions.
Sophos reports that over the weekend, a new iPhone worm (informally called "Duh" or "Ikee.B" by security researchers) was reported spreading in the wild in The Netherlands, designed to connect to a server in Lithuania and to follow orders from remote hackers.  The "Duh" worm hunts for vulnerable iPhones on a wider IP range than Ikee, which was only ever reported in Australia. Duh includes IP ranges in several countries, including The Netherlands, Portugal, Australia, Austria, and Hungary.
"This latest iPhone malware is doubly criminal. Not only does it break into your iPhone without permission, but it also cedes control of your phone to a botnet command server in Lithuania," says Brett Myroff, CEO of regional Sophos distributor, Sophos South Africa. "What this means is that a user’s iPhone has been turned into a zombie, ready to download and to perform any commands the cybercriminals might want in the future. If infected, you have to consider all of the data that passes through your iPhone compromised.”
In addition, Sophos reports that "Duh" changes the password on your iPhone – meaning that cybercriminals know what it is but infected users don't, allowing criminals to log back into your iPhone later.  However, SophosLabs researchers managed to recover the password – revealing that infected users can login as root with the password “ohshit”.
Apple's default root password – 'alpine' – on the iPhone breaks two fundamental rules as it's both a dictionary word and well-known. This doesn't matter for most iPhone users, as they haven't jailbroken their iPhones and installed SSH to allow remote access. But the new worm will break in and immediately change it.  This change is made by directly editing the encrypted value of the password in the master password file, so that the new password is never revealed. This password-changing represents an additional risk, as it means that cybercriminals now know what the password is but the user doesn’t, so they cannot login and eliminate the virus.
Sophos strongly recommends that all users of jailbroken phones change their passwords from 'alpine' immediately to avoid further attacks.