Index: wp-includes/class-http.php
===================================================================
--- wp-includes/class-http.php	(revision 18722)
+++ wp-includes/class-http.php	(working copy)
@@ -697,6 +697,9 @@
 				return new WP_Error( 'http_request_failed', sprintf( __( 'Could not open handle for fopen() to %s' ), $r['filename'] ) );
 
 			while ( ! feof($handle) ) {
+				$info = stream_get_meta_data( $handle );
+				if ( $info['timed_out'] )
+					return new WP_Error('http_request_failed', __('Request timed out.'));
 				$block = fread( $handle, 4096 );
 				if ( $bodyStarted ) {
 					fwrite( $stream_handle, $block );
@@ -715,8 +718,12 @@
 			fclose( $stream_handle );
 
 		} else {
-			while ( ! feof($handle) )
+			while ( ! feof($handle) ) {
+				$info = stream_get_meta_data( $handle );
+				if ( $info['timed_out'] )
+					return new WP_Error('http_request_failed', __('Request timed out.'));
 				$strResponse .= fread( $handle, 4096 );
+			}
 
 			$process = WP_Http::processResponse( $strResponse );
 			unset( $strResponse );
@@ -868,6 +875,9 @@
 		if ( ! empty($r['body'] ) )
 			$arrContext['http']['content'] = $r['body'];
 
+		// timeouts with stream_context_create for some reason need to be half of what you expect
+		$arrContext['http']['timeout'] = $r['timeout'] / 2;
+
 		$context = stream_context_create($arrContext);
 
 		if ( !WP_DEBUG )