After extensive googling I haven\'t managed to find an answer to this question1, which is surprising, since `security through obscurity\' isn\'t really security at al
According to the keychain documentation Keychain services and other Mac OS X security APIs are built on the open source Common Data Security Architecture (CDSA) and its programming interface, Common Security Services Manager (CSSM).
More information on that here
The discussion thread here quotes from official apple documentation (currently defunkt) stating;
All the password data in the keychain is protected using the Triple Digital Encryption Standard (3DES).
I'll see if I can turn up anything more current / definitive.
UPDATE:
OK there is a copy of an official OSX document here that does confirm the 3DES, however I agree that the implementation is likely to be subject to change.
Whether this also applies to iOS would also require verification, however given the harmonisation of iOS and Lion, I suspect it is more likely than not.