Some users in Australia have awakened to find themselves locked out of their iPhone. A message is displayed demanding a ransom. This is being done using the phone’s remote lock feature. It’s unknown at this time if Apple’s iCloud service has been hacked or something else.
This CNN report has more details.
Its important to use strong passwords of at least 12 characters. Apple also offers two factor authentication. See this Apple KB article for details on setting this up.