Google 2 Step Verification & iPhone

http://www.google.com/support/accounts/bin/static.py?hl=en&page=guide.cs&guide=1 056283&rd=1

Hello, panegyric

had the same problem myself, i sorted it by

1. Visit the Using 2-step verification page under your Google Account settings. Sign in with your username, password, and verification code if prompted.
2. Click Turn off 2-step verification.
3. A pop-up window will appear to confirm that you want to turn off 2-step verification. Click OK.

found this on googles support pages!