There are a number of theories behind why this is actually an issue. The popular consensus appears to be that, setting the time and date to January 1st, 1970 causes the internal time clock to be less than zero, and therefore confuses the device forcing it to freak out. The bottom line is that programming and handling date and times is incredibly complex, and we can best speculate for now.
Youd expect Apple to get it right and not put our hard-earned money at risk with such a ridiculous bug that can be exploited for any ill-intentions by anyone. For now, we also expect this to be fixed sooner rather than later with Apple rolling out a quick software update fix to this huge flaw in the iOS code.