IPhone :: Can't Connect To Wifi, Can Connect To Others

All devices surfing wirelessly on Airport Express.Replaced Airport Express with Time Capsule.Problem: Wife's iPhone4 (5.1.1) can not surf on wifi provided by my time capsule. All my other devices (iMac, Mac Air, iPad and my iPhone) can. Wife's iPhone can surf on an unsecure network somewhere nearby in my apartment complex. (Which to me, rules out a hardware problem).

Steps taken: Tapped iPhone wifi On/Off multiple times with no change. "Forget this network" multiple times with no change. Reset iPhone Network Settings multiple times with no change. Restored iPhone using iTunes as New iPhone once with no change. (Since doing that, I have restored with back up of iPhone settings and data.) Powered Time Capsule on/off several times with no change. Turned wireless security off with no change. Security is back on. It is WPA 2 Personal with a lengthy password. I'm not getting the "incorrect password" msg. Renewed lease multiple times with no change.

Other indications: 3G is in upper left. Status wheel is spinning next to my network's name. On the initial "Settings" window, my network name is shown (as if it were connected. But tapping it and going to the "wifi networks" window shows the list of available networks with the status wheel spinning next to mine.) Tapping the blue arrow on my network name leads to the window that has "forget this network" at the top, and a list of blank fields: IP address, subnet mask, router and so on. DHCP is chosen, HTTP proxy is OFF. Sometimes, the top two fields (ip address and subnet mask) have values filled in, but the rest of the fields don't.

On my Time Capsule, as seen via Airport Utility (V5.5.3), 3 devices are shown as connected. Clicking this provides a listing. My wife's iPhone wi-fi address is listed. It's "rate" however is 1. My imac is 216 and my iphone is 65. BTW, iOS devices drop off the list when they go to sleep. No big deal there.

Back to Airport Utility, in the summary tab... status is normal, version is 7.6.1, wireless mode is "create a wireless network", security is "wpa/wpa2 personal", channel is 149 auto and 1 auto (I tried changing 1 to 11 with no change), connect using "ethernet" and finally my IP address begings with 76. 76.xxx.xxx.xxx

Moving to the "Wireless" tab of Airport utility... wireless mode is "create a wireless network", radio mode is auto, radio ch. selection is auto, wireless security is wpa/wpa2 personal, "remember password in keychain" is checked. Now Clicking on the "wireless network options" button..... 5ghz is not checked, country is USA, multicast rate is "low", t-mit power is "100%", WPA group key timeout is 1 day (it used to be 1 hour but this has made no change in the problem), "use wide channels" is not checked, "create a closed network" is not checked.

MAC access control is not enabled. But it was enabled previously and I added my devices by their Wi-Fi addresses one at a time until i decided to turn it off due to this problem. this resulted in no change with the problem.

Personally, I feel the prob lies with the DHCP and ip address and related fields, but I don't know enough about what their values should be in relation to my other devices to alter them on my own.

Info:
iPhone 4, iOS 5.1.1