Hi,
Do you have an Exchange account setup on the iPhone?
The Exchange admin could have a policy on the account that requires a Auto-Lock and Passcode.
You can find more information about Passcode settings on page 33 of the Enterprise Deployment Guide:
http://manuals.info.apple.com/enUS/Enterprise_DeploymentGuide.pdf
So, if the issue is caused by the exchange account, you can workaround it by removing the Exchange account or contacting the Exchange admin and having them change the policy.
If the issue is not caused by an Exchange account, try restarting the iPhone by holding the Sleep/Wake button until the red slider appears> then slide to turn off> and turn the iPhone back on by pressing the Sleep/Wake again.
-Jason
