There are several threads discussing this issue. I tried many suggested solutions without success until one finally worked and I'm sharing it in every thread.
First, here is my hardware/software situation, if your's is diff, then the fix I found might not work.
iPhone 4 upgraded to iOS 5. IMAP email wouldn't SEND
Go into setting>mail>your account>Outgoing mail Server SMTP>Primary Server then turn Server ON and fill in both User Name + Password under Outgoing Mail Server.
It seems that in previous versions of iOS, you didn't need to enter your username and password in the outgoing mail server settings, but in iOS 5, IT MAKES A DIFFERENCE.
Thanks to worapoj for being the first (i saw) to post this simple fix.