Clocked up a number of different secured networks and all without a hitch.
It looks like iPhone and iPad are really faulty in accessing a secured WiFi. I performed several tests about. If I use DHCP to access a WPA or WPA2 secured WiFi, 7 times out of 10 I get the annoying 169.254.x.x address. All the other devices works (desktop, laptops, Nokia smartphone, etc...). I tried many of them. The only faulty devices are iPhone 4 and iPad 1. Resetting the network settings, switching on/off the devoice or the router, sometimes help, but not always. The problem does NOT occur on unsecure WiFi or WPA-Enterprise security protocol. Fixed IP address sometimes helps, but not always. I am aware of many other users with similar problems.