Does "Sync with this iPhone over Wi-Fi" use encryption? I would like to sync my iPhone to iTunes over Wi-Fi but only if the process is encrypted for privacy.  I'm still feeling a lack of trust after learning that MobileMe synced personal data across the Internet unprotected.  Is the sync encrypted?
iTunes Wi-Fi Sync does not use encryption as it is performed on your local network only.
Your data is not transferred over the internet, so it's as secure as your local network is.

(The link about MobileMe is extremely old; Yahoo! Mail and Windows Live didn't use HTTPS.)