Iwelumo's crucial goal arrived in the second minute of injury time at the end of the first half.
The big Scotsman rose high to head home Greg Halford's long throw in to the danger zone.
Otherwise, it was visiting Scunthorpe who forced the pace and they can feel hard done by at not taking at least a point for their visit to Layer Road.
Their best chance fell to centre-half Richard Hinds, who scooped a shot over the bar from just eight yards out.
The Iron had looked the more likely to score before Iwelumo pounced. Midfielder Matt Sparrow latched onto a stray pass from Karl Duguid and tested Aidan Davison with a long-range shot that the home keeper managed to gather.
Right-winger Cleveland Taylor, a former Bolton trainee, was a constant threat and he looked poised to score on 40 minutes, only to be stopped in his tracks by a well-timed challenge from defender John White.
The visitors stepped up a gear in the second half and Colchester were really hanging on at times.
But they dug deep and could have stolen a killer second goal in injury time when midfielder Neil Danns had a close-range shot well-blocked by keeper Tom Evans.
As a result of this win, the U's have climbed above Essex rivals Southend into top spot.