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It appears that the user name and password that OmniFocus for iPhone uses can get stuck on a particular value. If you enter a typo or if your login information changes, OmniFocus gets stuck using the bad/old information.

We're going to add some code in our next update that manually prompts you for another user name and password combo when we get a "403 forbidden" response to a sync.

For the time being, though, we'll work around the problem by doing the following:
In OmniFocus' settings screen, scroll down to the sync settings.
Tap "advanced", then enter "http://demo.omnigroup.com" into the "Location" field.
Tap 'done', then tap the sync button.

Your phone will attempt to contact our server for a sync; we'll prompt the phone to ask you for a new login and password.

Type in random gibberish for the user name and password - the point here is that we want our server to send you a 'bad password' response. (Do not type in the user name and password of the *account you're actually trying to sync with; we could read that data.)

In any case, when the password sheet comes down a second time, tap 'cancel', then set the phone up with the correct sync address and start a sync.

You should be asked for the user name and password to your sync location. Enter the new information and you should be back up and running.