Gmail on iPhone "username or password is incorrect"

"The user name or password for imap.gmail.com is incorrect"

To fix, go here and enable access:
http://www.google.com/accounts/DisplayUnlockCaptcha

But what you really want to do is create a one-time application-specific password:

• Go to Google account settings: https://www.google.com/settings/account
• Click "security"
• Click "Manage your application specific passwords"
• Create a new password and use that on your device

(source)