Of course even as you try to "set the record straight" you are adding confusion.
Your typed settings above suggest turning SSL off, however the last 2 lines of your link suggest using port 993 and SSL On.
I would recommend that everyone use SSL ON for both incoming and outgoing. (otherwise you're sending your password in clear text.) The ports I've used with my iPhones for about 4 years now are suggested here: http://wiki.dreamhost.com/Secure_E-mail but to clarify: Incoming(IMAP) 993, Outgoing(SMTP) 587
Did you answer the OP's question? No you took the approach that support always takes, it's a problem with the customers iPhone setup. The OP also clearly stated:
Let's restate that:
--It used to work, it suddenly stopped at this time approx.
--No nothing was changed in the iPhones settings.
--The account has been deleted and re-added with the assistance of Dreamhost Support.
Also if you are in the process of updating the iPhone wiki as mentioned I think the single most confusing thing (that i've pointed out in multiple threads here) is that in SMTP setup on the iPhone the word "optional" appears for username and password. Of course that means that it's optional on the iPhone side, Dreamhost however requires username and password for all SMTP connections, therefor it's not optional. There should be a note in your documentation stating that it's NOT OPTIONAL as suggested on the iPhone screen.