Is password to make purchase from App store on iPad and iPhone encrypted?
According to Apple, "The iTunes Store and Mac App Store uses Secure Sockets Layer (SSL) encryption on all functions that require personal information."

So passwords are sent encrypted, not in cleartext. If the NSA is packet sniffing at your local Starbucks, chances are they know how to get your password (but if they're looking for your App store password, you've got bigger problems), but it should be reasonably safe.