I think this is a feature of mobile Safari rather than a bug. In our work on FastClick, my colleagues and I found that iOS will only allow focus to be triggered on other elements, from within a function, if the first function in the call stack was triggered by a non-programmatic event. In your case, the call to setTimeout starts a new call stack, and the security mechanism kicks in to prevent you from setting focus on the input.
Remember that on iOS setting focus on an input element brings up the keyboard - so all those web pages out there that set focus on an input element on page load, like Google does, would be extremely annoying to use on iOS. I guess Apple decided they had to do something to prevent this. So I disagree with @DA: this is a feature not a bug.
There's no known workaround for this, so you'll have to ditch the idea of using a delay.
Update August 2012:
As of iOS 5, handlers triggered by synthesised click events are allowed to trigger focus on input elements. Try the updated FastClick input focus example.