When he spoke before the muslim leaders in Cologne last year, he basically warned them that the Church has a long memory of muslim attacks on Christians stretching back to the Byzantine Empire, and that they were in error if they thought the patience of Christians was infinite. In short, he was warning them they might re-awaken something in the West that they have not seen for a long time, and they would not be happy about it.
Benedict has been spending far more time on leftist/social justice issues than on the threat of Islam.