Have you tried loading the socket.io script not from a relative URL?
You're using:
<script src="socket.io/socket.io.js"></script>
And:
socket.connect('http://127.0.0.1:8080');
You should try:
<script src="http://localhost:8080/socket.io/socket.io.js"></script>
And:
socket.connect('http://localhost:8080');
Switch localhost:8080 with whatever fits your current setup.
Also, depending on your setup, you may have some issues communicating to the server when loading the client page from a different domain (same-origin policy). This can be overcome in different ways (outside of the scope of this answer, google/SO it).