Smart Cover security flaw allows limited iPad 2 passcode bypass
a Smart Cover can essentially unlock an iPad 2. The person who unlocks your iPad 2 will not have complete access to your iPad, but will be able to gain entrance to whatever you locked your iPad 2 on. If your iPad 2 went to sleep in Mail, Safari, Messages, Contacts, or Maps, you can imagine the sorts of personal information that can be viewed on your iPad.
A temporary solution here would be to simply disable Smart Cover unlocking from within the Settings app on your iPad 2. This is the latest in a series of Siri, Camera and Photo Stream related security issues with iOS 5. Here's hoping Apple directly addresses them with an update soon.