Is the iPhone hard drive encrypted?

Recently my iPhone 5 was stolen, and so I started wondering about some questions. Luckily it managed to be reconnected to an internet connection and it was erased through iCloud.
My question is, does anyone know if the iPhone hard drive is encrypted? Let's say the phone never made it to a connection and therefore didn't receive the command for a swipe. Could a thief plug in the iphone and access the data on it, or extract the hard drive and get access to it? Or is the data on the iphone encrypted?
Thanks!

The flash memory is soldered onto the main board (not socketed).  This means that the probability of success in extracting the chip and re-assembling it to a carrier that could be read on a PC is rather low.  Certainly some government agencies would have the ability to do this, but not the average criminal.  The cost is much too high for even normal identity theft.  Couple that with the memory encryption and you are safe from all but the most persistent prying eyes (NSA, CIA,..._

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