While Apple has been softening its policy on water damage for some iOS devices, any trip to the Apple Store for a repair may still entail a little anxiety about the water indicators reporting a problem -- even when you know that your device hasn't been exposed to any liquids.
Historically, Apple has checked for water damage by adding liquid contact indicators (LCIs) that change from white to red when exposed to water in the headphone jack and the 30-pin connector of iPhone, iPad and iPod devices. The LCIs are supposed to turn red only after 90 seconds of submersion, but they seem to be a little more sensitive than intended when exposed to a heavy amount of moisture.
It seems that iPad 2 users will no longer have to fear false positives because Apple has apparently removed the LCIs from a redesigned headphone jack as well as from the docking connector. 9 to 5 Mac even posted an updated procedure in the Genius DB advising checking for water damage by looking for corrosion in the SIM card tray on the iPad 2.
This certainly doesn't mean you should take your iPad for a swim -- the iPad 2 is not waterproof -- but you shouldn't have to worry about dampness associated with day-to-day activities causing problems so long as you're careful.
While this could end up costing Apple more by replacing iPads when there is legitimate water damage, it will improve customer service with people who might otherwise experience Apple's red circle of death, and perhaps it will help prevent further lawsuits. It's certainly good news for users.