Have you tried moving to a different USB port. I believe I've had this problem before and moving to a different USB port fixed it.
The IOT devkit Image version 1 does not support the Arduino Sketch capability, as it uses eglibc for the Linux libraries, while the Arduino tools build for uclibc. So as you found out, you need to swap back to the Arduino SD card image if you want to use the Arduino IDE. We plan to fix that in our next public release of the Devkit image.
Thanks Stewart for this information!
Mike ,I tried changing usb port couple of time but did't get success.
some time it is trying to connect and showing tume-out error.
All things are working fine with bigger linux image and I am facing this with only iotdevkit image.
were you able to upload sketch using iotdevkit image ?