I'll admit that I had just skimmed the original El Reg article, all that legal stuff bored me, and I was more interested in answering my questions above. So I may have missed this bit if it was there. I've now read a bit more from the recent Ars Technica article covering the same case. To quote that article -
"Investigators argued that they needed the iTunes password so that the phone's firmware could be updated prior to actually searching the phone."
That makes no sense to me. Um, see icon ->