A bug has been found in the iPhone 3.0 software that means that deleted emails are still easily discoverable using the handset's search function.
To replicate the bug, pick a message with a subject line that's fairly unique and delete it. The remove it from trash, and any other IMAP or POP folders it might have gone to and be sure it's not there. Then go to the search function, and look for the subject line.
You should see the entire message listed, clear as day. It seems that the handset caches the contents in a database index as they're created, for ease of searching, but isn't so good at removing them once they're deleted.
A fix is imminent, according to sources inside Apple, and should be rolled out in the next version of the software, but in the meantime, be careful what you do on your email, if you're worried someone might find out about it.