> Perhaps I'm missing something, but the iPhone instructions (http://www.google.com/mobile/products/sync.html#p=apple) tell you to add an Exchange (ActiveSync) account in your iPhone settings, rather than modify your existing Gmail account.

You aren't. The goal is to have push gmail, and Apple's gmail client doesn't handle push. So the choices are mobileme (which Google can't access), Yahoo Mail (same) or ActiveSync.