our little chunky monkey has this in several places. doc called it intertrigo, we call it neck cheese.
the best thing for it that we've found is washing gently, not with a cloth but with warm water, a hand, and a little unscented aveeno liquid baby wash, then blow-drying it a little and putting a bit of california baby baby powder on it. works like a charm. doc also recommended the desitin zinc oxide cream, but it has cod liver oil in it and it irritates my skin.