When I use either the Iphone optimized facebook site or the original facebook site, it will log me off in x amount of minutes. Anyone have this problem?

yes I have noticed the same thing and it's quite annoying really. It used to work and I have no idea if it's Facebook's issue or iphone's issue.

Anyone know of a way to fix this. I have tried to reset network settings and also to reset all cookies, cache and history thru safari on the iphone.

Still doin the same thing.

I have the same problem. It seems to have started after I upgraded to 1.1.4.

I fixed this by using WinSCP to set a 777 ortal to the files:
/private/var/mobile/Library/Cookies
as well as:
/private/var/mobile/Library/Cookies/Cookies.plist
then turning off, and on the phone.

i just restored my phone again

use putty or terminal and ssh into phone and enter this command
# chown -R mobile:mobile /var/mobile

as told by ngin, on a different thread,