If you encrypt an iPhone 4 backup on iTunes and then forget your password, you will not be able to restore from backup and your data will be unrecoverable. If you forget the password, you can continue to back up and use the device, however you will not be able to restore the encrypted backup to any device without the password. You do not need to enter the password for your backup each time you back up or sync.
If you cannot remember the password and want to start again, you can use a SmartKey iTunes Backup Password Recovery for iPhone to unlock iPhone backup password at first. Check out http://t.co/lLo3DVXSTD for more details.
You will unlock your iPhone 4 without a pass code by first pressing the emergency call button at the unlock screen. Make two taps on the home button for the iPhone to take you to private 'favorites' page without the need to enter the unlock code. If you have favorite entries in the address book which contains URLs, e-mail addresses or mobile phone numbers, then those entries can be used to launch the other features.