I had a similar issue and the fix was (on my iPhone 4) to go into the wifi settings and tell it to forget the wifi network I was on; then re-select that network, enter the network password, and then Find my Friends launched and the accept terms and conditions disappeared under the iCloud settings and everything is fine now.
I was very close to going down to my local Apple Store with my iPhone 5 and the iPhone 4 (both of which are tied to the same iCloud account) and raising Cane.
Not sure why but something appears to have been blocking the wifi on my iPhone 4, despite the fact that under wifi settings it was showing me logged on to my home network.
So if you are getting some form of unable to access server/timed out error when trying to accept the new iCloud T&C's, try telling your affected IOS device to forget the network, and then log back into it. Worked for me.
What a pain--between this and the Fubar AppleTV 6.0 update that bricked my AppleTV, I thought for a moment I was in a parallel universe running Windows devices and getting blue screens of death.