Trouble with 2-way communication to Exchange

I've upgraded my iPhone 4 to iOS5, and initially thought I had no trouble, but I'm finding that while my phone will receive mail, it will not receive the updates to the changes made in Outlook. In other words, the message comes into the Inbox on both Outlook and Mail.app, in Outlook I take an action with the message (mark it read, move it to another folder, delete it, etc) and in iOS4, the iPhone updated to match, however, in iOS5 nothing happens in Mail.app. It appears that they are acting like 2 seperate mailboxes instead of a common Exchange box (which they are). I have set the Exchange to only sync Mail and Calendars, no contacts or reminders.

So far I have tried:

Reboot the phone.

Deleting my iCloud account (it is still currently deleted).

Reboot the phone again

Remove and re-add the Exchange account.

Reboot the phone

Remove the Exchange account, reboot, then re-add the Exchange account.

Our company does not provide support for iPhones/Android but this worked normally under iOS4, which is why I'm more inclined to believe it is a new behavior introduced in iOS5.

Any help would be appreciated.