Did you actually set up your Sync account Username as your email address?

You're asked for your email address for identification, but your Username can be something else.

Here's how I got things working:

Go to Tools > Security > Save Passwords.

You should see an entry with with "(Mozilla Services Password)".

Use the username from that entry to log in to the Firefox Home app for the iPhone.

Firefox Home doesn't work with *new* Firefox Sync accounts created with Sync 1.5 (released Oct. 6, 2010). Trying to log in to Firefox Home with these accounts will result in a "Login Failure User Name Not Found" error. We know this is not ideal to say the least. This will be fixed in the next version of Firefox Home (1.0.3) which is currently waiting for approval in the App Store.

New Firefox Home users, will need to use Sync 1.4.4 which can be downloaded here https://addons.mozilla.org/en-us/firefox/downloads/file/96423/firefox_sync-1.4.4-fx+fn+sm.xpi?src=version-history&confirmed=1

Once you install Sync 1.4.4 you'll need to create a new Sync account and complete the initial sync again.

Firefox Home 1.0.3 is in the App Store now. This fixes all of the login issues with accounts created with Sync 1.5.