iPhone Setup
The first step in configuring an ActiveSync Exchange account on your iPhone is to verify that iTunes is not configured to sync your iPhone to Outlook over USB. Contacts, Calendars and Mail will sync wirelessly through ActiveSync. The traditional iTunes wired sync together with ActiveSync would create duplicates.
Open iTunes and connect your iPhone to your computer.
Under Devices, click your iPhone.
Click the Info page.
Deselect the check boxes, Sync Contacts, Sync Calendars, Sync Mail Accounts.
Click the thumbnail below for a full size screen shot to illustrate these iTunes settings.

Next remove any old email configuration from the iPhone then add a new Exchange email account configuration.
From the home screen, touch Settings, then touch Mail, Contacts, Calendars. Choose Add Account. Choose Microsoft Exchange.
These steps updated May, 2010 due to iPhone software updates.
Type the email address.
Do not type anything in the domain box.
Type your complete "user@domain.com" username in the username box.
Type your password in the password box.
Touch the next button.
Wait while it says verifying.
When it says enter your Exchange account information,
type mail.webville.net in the server name box.
Touch the next button.
Wait while it says verifying.
When it says select info to synchronize using Exchange,
confirm that Mail, Contacts and Calendars are all switched on and touch the Done button.
Refer to iPhone screen shots below.
When Exchange ActiveSync is configured and working correctly, you will hear new email hit your iPhone within seconds of when you hear it hit your desktop Outlook. If you move a message from the inbox to a subfolder on your iPhone, you will see that change reflected on your desktop Outlook within seconds. Needless to say, we're big fans of ActiveSync, which was added with the 2.0 iPhone software upgrade in July 2008. The 3G and 3Gs iPhones come with 3.0 or later and they make excellent ActiveSync Exchange email clients.