Is there any chance you might be using the Management Studio 2012, but you're connecting to an older version of the SQL Server engine?
Run SELECT @@Version
and show us the output - this will show you what engine version you're connected to.
In my case, I get:
Microsoft SQL Server 2008 R2 (SP2) - 10.50.4000.0 (X64)
Jun 28 2012 08:36:30
Copyright (c) Microsoft Corporation Developer Edition (64-bit) on Windows NT 6.1 (Build 7601: Service Pack 1) (Hypervisor)
What do you get?!?
IIF
only works if you're connected to a 2012 (v11.0) engine version!