Seeing as the ipad smart cover concists of lots of magnets.. tbh I think whoever you took your iphone to was a silly person, or you just got really unlucky. The effects would not be instant in my mind / experience, given the low magnetic fields from cases. A device wouldnt just stop working. Sadly(or gladly) I cant seem to find any of my neodymium magnets right now to test what would happen if one was near my kindle. I know they can cause some interferance since they are up there with most naturaly magnetic materials, and if a company used one for a protective cover then I can kinda see it messing up stuff but you woulda noticed it on iphone lcd screen instantly
.I guess what I am saying is most of these case flaps use nothing more powerfull than a very thin fridge magnet with a bit of metal on the device side.. they are safe
edit: just thinking about it heh.. you could argue its electro magnetic / pulsating so wouldnt do much damage, every fan in your pc uses an electro magnetic field
.. also any relatively modern hdd will have neodymium magnets in them hehe, I am not in any way saying magnetic damage doesnt hapen.. just not in the way you think, I guess