Same issue here: my wife's Verizon iPhone4S has all of a sudden been saying that the wifi password is incorrect yet my iPhone, MB Air, and both of our iPads connect perfectly. I tried the router reboot and network settings reset as suggested above (in fact we have 2 wifi zones and both work flawlessly with all other listed devices) but to no avail.
Will a settings reset (but not a content and settings erase) be my next step? And which/what settings will be lost? Ringtones? Notifications? Mail passwords? Just trying to ascertain just how thorough a lobotomy is done with "Reset All Settings"