In iOS 5 Apple requires all backups for an iOS device enrolled in MDM be encrypted.
This means it's not possible to have a non-encrypted iOS backup if the device is managed. We find this confusing because the MDM options in Restrictions > Security & Privacy has a checkbox for Force encrypted backup.
What this means, is enrolling an iOS device in Robot Cloud — even if you don't apply any restrictions — will result in iTunes prompting for a password for the backup during the next sync.
If you encrypt an iPhone backup in iTunes and then forget your password, you will not be able to restore from backup and your data will be unrecoverable. If you forget the password, you can continue to back up and use the device, however you will not be able to restore the encrypted backup to any device without the password. You do not need to enter the password for your backup each time you back up or sync.