A security breach has been discovered on the iPad 2 running iOS 5. It allows to bypass the passcode lock with a smart cover or a small magnet.
As you can see, one would just have to keep the top putton pushed down like when turning off the device, to close the smart cover, to open it again to access the iPad now waking up without asking for the passcode.
The iPad is however not fully wroking in that state, it is impossible to launch an app. It is however possible to open an app that was already launched and see what the user was doing before putting the iPad to sleep.
As often with those breaches, this one being somewhat limited, the most important thing is to be aware of their existence.