Is the inactivity timeout available in the v3.01 firmware?

The inactivity timeout does not work in firmware 3.01. You will need firmware 3.06 and higher in order for inactivity timeout to work. Here is a link to the latest firmware along with upgrade instructions:

Inactivity timeout commands:

# set ip telnet inactivity<enable/disable>
# set ip telnet inactivity-timeout<t secs>