I'm having the same problem!
I couldn't send yahoo emails from my phone for some reason - it said the password or username were incorrect (they weren't) so I tried deleting my yahoo account from my iPhone and then re-adding it, but now I have this IMAP server is not responding error instead and now no incoming mail either! It's so frustrating. I hope someone can help!
Raghuvemuri, did you resolve this problem? If so, how?
What instructions did you use for setting up the accout, The folowing says:
The service works by routing email through imap.apple.mail.yahoo.com, a mail server designated specifically for the iPhone by Yahoo!.
Read more: http://reviews.cnet.com/8301-19512_7-10115385-233.html#ixzz1d1darNWo