Q: can log onto i-tunes from computer but i-phone does not recognize password

Try logging out of it on the iPhone by tapping on your id in Settings > Store (Settings > iTunes & App Stores on iOS 6) and then log back in and see if that 'refreshes' your account on it.

You could also try a disconnecting and reconnecting to your network and seeing if that makes any difference, and if not then try a soft-reset : press and hold both the sleep and home buttons for about 10 to 15 seconds (ignore the red slider), after which the Apple logo should appear - you won't lose any content, it's the equivalent of a reboot.