I just posted this on a NZ website:
I have the exact same thing.
What has happened is I didn't turn MobileMe off on the iPhone before setting up iCloud. It locks the iCloud account.
2 hours on the line to MobileMe support came to nothing. Apart from a suggestion to restore the iPhone, however I can't see how that will help unless you start from afresh on the phone and who wants to lose all their texts etc?
I set up my iPad differently after this by turning MM off and then inputting the iCloud credentials. Smooth sailing after then, however I have yet to find a fix for the phone.
UPDATE:
If you have the greyed out problem above its because the Parental restrictions were turned on during the iOS update.
Turning off MM before logging into iCloud avoids the problem, but a quick fix is to unlock the restrictions and then you can change the menu items.
Apple page
here.