I spent some time answering lots of emails personally, and I put this quick guide together. If this helped you solve your problem, please consider donating $5, so I can continue to provide this type of support.
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This is a quick guide I put together to get Microsoft Exchange Server 2003 (not 2007) working with the iPhone via IMAP.
I provide no guarantees, this is what we did, in a corporate environment, to make the iPhone work decently well.
Caveats:
Your architecture mirrors ours:
Outlook Web Access uses WebDAV and HTTP/HTTPS to handle email for both the web clients as well as clients via ActiveSync. This is how Windows Mobile devices attach, and get all of the native support of an Outlook client. Since the iPhone does not support these protocols as part of Mail, you will have limited functionality. How limited? Here's what I found:
You will be unable to SEND mail through your OWA server (this could be fixed, but we chose not to). You will have to configure a different SMTP server in order to send or reply to messages with your corporate account. I personally just used the same one that I use for my personal email. However, people have reported that they have been able to use GMail's SMTP servers (after setting up appropriate identies on GMail), Yahoo!'s, and of course AT&T's (I've seen mail.attbi.com, cwmx.com, and swmx.com all listed as valid and/or working, I haven't personally tested any).
Sent mail will be placed in a folder, under your Inbox, in Exchange called "Sent Items". I haven't figured out how to get it to put it in the "right" folder.
Deleted mail will be placed in a folder, under your Inbox, in Exchange called "Deleted Items".
If you delete a message via your iPhone, it will stay in your Inbox under Outlook, as read, until the iPhone "purge" runs. By default it's set to *Never* run this purge, hence messages that you've processed on your iPhone will stay in your Inbox as read messages and will not be moved. Once the "purge" runs they get moved into the "Deleted Items" folder discussed above.
OWA Server Setup (We'll call the server "OWA" or "owa.yourdomain.com")
Start the "Microsoft Exchange IMAP4" Service
Open "Exchange System Manager", go to "Administrative Groups", "First Administrative Group", "Servers", OWA, "Protocols", "IMAP4", then right-click "Default IMAP4 Virtual Server" and click "Start"
On the above "Default IMAP4 Virtual Server" right-click it and select "Properties"
On the resulting "Properties" window, accept all of the defaults, except:
On the "Access" tab, click "Authentication", check "Requires SSL/TLS encryption"
Also on the "Access" tab, click "Communication", check "Requires secure channel"
Stop and Re-start the "Default IMAP4 Virtual Server"
Exchange 2003 Server Setup (We'll call the server "EXCHANGE")
Start the "Microsoft Exchange IMAP4" Service
Open "Exchange System Manager", go to "Administrative Groups", "First Administrative Group", "Servers", EXCHANGE, "Protocols", "IMAP4", then right-click "Default IMAP4 Virtual Server" and click "Start"
On the above "Default IMAP4 Virtual Server" right-click it and select "Properties"
On the resulting "Properties" window, accept all of the defaults, except:
On the "Access" tab, click "Authentication", uncheck "Requires SSL/TLS encryption"
Also in "Authentication", check "Basic authentication (password sent in clear text)"
Also in "Authentication", check "Simple Authentication and Security Layer"
Stop and Re-start the "Default IMAP4 Virtual Server"
iPhone Setup
Go to Settings, select "Mail", select "Add Account...", select "Other", click "Exchange"
Fill out "Name" with your Name
Fill out "Address" with your corporate e-mail address
Fill out "Description" with whatever you want this account called in the list
Fill out "Host Name" with owa.yourdomain.com
Fill out "User Name" with your Outlook/Exchange user name (no domain portion)
Fill out "Password" with your Outlook/Exchange password
The "Outgoing Mail Server (SMTP)" is left as an exercise for the reader (see above)
Click "Save" at the top
Now, go into the settings for the newly created account, scroll to the bottom, select "Advanced"
Change "Remove" to "After one day" or whatever you want. Not changing this will keep ALL deleted messages on the server, simply as read messages, it's annoying. It'd be better if we could purge every 10 min or so, but we can't, and we take what Apple gives us.
"Incoming SSL" should be "On"