It looks like your FIFO is only used for the child to speak to the parent. Would a regular pipe serve better? It would be faster.

while (my $connection = $listen_socket->accept)
{
    my ($pid, $line, $in, $out);
    pipe $in, $out or die $!;
    if ($pid = fork) {   
        close($out);
        warn localtime(time),
             " Connection recieved ... ",
             $connection->peerhost,
             $/;
        $connection->close();
        # microsleep till the kid's awake
        do { select undef, undef, undef,.001} until kill 0, $pid;     
+ 
        while(<$in>){$_ =~ s/a-z/A-Z/i;print $_;}
        close($in);
    }
    elsif (defined $pid){
        close($in);
        $listen_socket->close;
        while(<$connection>){print $out $_;};
        close($out);
        exit 0;
    }
    else {
        die "Error while forking: $@" unless defined $pid;
    }
}
[download]

There may be a lot more to do to make this work with your real application, particularly if there is to be more than one connection at a time. In that case, the parent will need to listen on the socket and several pipes at once.

After Compline,
Zaxo