Texas33,
Could you give the exact wording of the error message you receive? The error I am familiar with is:
"Cannot send mail. One of the recipient addresses was invalid."
I've seen this issue occur in two different instances. The most common is due to security settings on outgoing server you're using; it requires you send over a particular network to access their server, and sending over anyone else's network besides theirs results in this error. So, it's a provision your email provider has made.
The other time I've noticed this (of which I have experienced personally) is due to allowing the iPhone's autofill to complete the email address you're typing. Usually another error precedes the error message above, stating: "Invalid Address. 'xxxx@me.com' does not appear to be a valid email address. Do you want to send it anyway?". If this is the case, ignoring the autofill and completing the entire email address manually should work around this issue. For replies, you would have to try erasing the email address in the address field and re-enter it manually I'd imagine.
Hope this helps,
Raleigh