I have seen this three times in the park...all with an iPhone. You put the correct password in and it still says wrong password and won't connect.
The problem is in the automatic selection of security protocol.
We found this
1. Select "Other" in the Network.
2. Put the SSID same as your router's.
3. Select the appropriate security protocol from the menu.
4. Enter the password.
Now, that didn't work because it couldn't find the SSID (name of wireless network) but, once I did this and went back to connect it recognized the password and logged on.