Thanks Ram. I was using code similar to the screen shot and it was not solving the timeout problems. It took me quite some time to figure this out but here's what was happening (In case anyone else cares):
The Arduino Starts sending serial messages on bootup. If Matlab is stated after the Arduino Matlab has a lot of trouble framing the Serial messages. What does work is to reset the arduino, and then while the bootloader is starting up, open the serial port. That way Matlab doesn't time out and it gets the first reading for the arduino. Another solution is to implement some sort of handshaking.
Do you have the Arduino side of this code? I get a timeout when I try to read in the serial data using the serial.write() on the arduino. Is there a end of line that is required by Matlab?
