Socket.io - Timing Out

I am trying to set up Socket.IO but Im having trouble getting it to work..

I have followed these instructions to get a node server working which all went ok (I have used 127.0.0.1rather than the private ip address as everything is on the one server

I have then aded this to my nginx config:

location /socket-app {
    proxy_pass http://127.0.0.1:8080;
    proxy_http_version 1.1;
    proxy_set_header Upgrade $http_upgrade;
    proxy_set_header Connection 'upgrade';
    proxy_set_header Host $host;
    proxy_cache_bypass $http_upgrade;
}

and restarted nginx

all the above is working as when I go to http://ift.tt/19PDkM9 I get "Hello World" printed on the screen.

So far so good!

Now for the socket.io setup

I used the code snippetes from Socket.IO in the "Using with Node http server" section replacing the port number with 8080:

app.js:

var app = require('http').createServer(handler)
var io = require('socket.io')(app);
var fs = require('fs');

app.listen(8080);

function handler (req, res) {
    fs.readFile(__dirname + '/index.html',
    function (err, data) {
        if (err) {
            res.writeHead(500);
            return res.end('Error loading index.html');
        }

        res.writeHead(200);
        res.end(data);
    });
}

io.on('connection', function (socket) {
    socket.emit('news', { hello: 'world' });
    socket.on('my other event', function (data) {
        console.log(data);
    });
});

index.html:

<script src="http://ift.tt/1Abvuox"></script>">
<script>
    var socket = io('http://example.com:8080');
    socket.on('news', function (data) {
        console.log(data);
        socket.emit('my other event', { my: 'data' });
    });
</script>

but in the console I am now getting:

[Log] socket.io-client:url parse http://example.com:8080 +0ms
[Log] socket.io-client new io instance for http://example.com:8080 +0ms
[Log] socket.io-client:manager readyState closed +0ms
[Log] socket.io-client:manager opening http://example.com:8080 +0ms
[Log] engine.io-client:socket creating transport "polling" +0ms
[Log] engine.io-client:polling polling +1ms
[Log] engine.io-client:polling-xhr xhr poll +1ms
[Log] engine.io-client:polling-xhr xhr open GET: http://ift.tt/1LmRIHq +0ms
[Log] engine.io-client:polling-xhr xhr data null +1ms
[Log] engine.io-client:socket setting transport polling +1ms
[Log] socket.io-client:manager connect attempt will timeout after 20000 +5ms
[Log] socket.io-client:manager readyState opening +1ms

then after a while i get this:

[Error] Failed to load resource: The request timed out. (socket.io, line 0) http://ift.tt/19PDmng

Have no idea why it is timing out..

Can anyone point me in the right direction?

i am using an ubuntu 14.04 server with forge (but this is not in a laravel setup)

Thanks, Dave