When VGA output is used, all text fields do not work properly. This has been identified as an iOS6 problem and has been reported to Apple. Hopefully Apple will fix this problem ASAP. This only affects applications that use their own VGA output (for rotation etc...).
1-23-13 This has been confirmed by Apple and unfortunately there is no work-around for iOS6 (see below).
NOTE: THIS DOES WORK IN iOS7!