The main issue with an "unencrypted" device is obviously a local attack. Someone will acquire the phone in question and extract the typically personal messages, files, keys, and so on. An unlock pattern or PIN is usually required to go beyond that, such as installing/side-loading apps.
There are many tools on the market, and range in quality. Some are simple pieces of software which only work on phones without an unlock pattern, all the way to pieces of hardware which are capable of brute forcing both the encryption keys and/or unlock pattern.
Depending on your threat model, traversing an international border might be of some concern, or even if you live in certain countries. As Radio Free Asia notes:
Government procurement documents cited by Reuters showed that police
stations in almost every Chinese province have been acquiring special
data-extraction devices for smartphones since the ...
The major concern really seems to be that people place banking information and other sensitive pieces of information on their phones. If it was stolen, it could lead to identity fraud, which is massive ordeal to sort out (see the first 3 lines of LifeLock's history). Information like a SIN/SSN can be easily converted for cash on the blackmarket, especially in volume.
Most device encryption succumbs to the very low-tech "rubber-hose" attack for obvious reasons. That is why threat modeling is important to do, as 3DES or RC4 may prove enough to stop street thieves getting information off the phone. Encryption doesn't prevent thieves wiping the phone and selling it "as is", or authorities forcing you to produce the encryption keys in one form or another.
Identity theft is a large reason why paper shredder campaigns are pushed to home/small office users, which can be offered as a comparison to "device encryption" on some level.