Until recently everything has been working great with receiving my BellSouth.net email on my iPhone 4. About the time Yahoo announced the 450k users were hacked on the news i started having this issue. I started getting an error in my phone indicating my Yahoo ID and Password don’t match. (Yahoo is the email host now with BellSouth.net mail). However i can go online to Yahoo mail and log on using the same ID/Password combination without any problems. I also noticed my BellSouth.net email on my MacBook Pro started having the same issue with an error 'password' doesn’t match.
I have deleted the account on my iphone and reinitiated it. No luck.
As a work around I went Yahoo Online and had my emails forwarded to my me.com account so i can get my emails on my phone.
It sounds like the credentials for accessing Bellsouth.net email access via a mobile device or from a mail client software (instead of through the web) might have changed. How exactly do you add your Bellsouth.net email to your phone? Do you use the yahoo! wizard or the "Other" wizard?
I have a bellsouth.net email account on my iPhone 4s with no problems. I would again delete the email account on your iPhone and then do a hard reset of the phone by holding down the power button and home button at the same time until you see the Apple logo. It will take 10-20 seconds and be sure to ignore the "slide to power off" message. Once your phone restarts then go back into settings and set up the email account again by selecting Yahoo under add account.