iPhone iOS8.1.1 and iTunes 12.01.26 issue?

Updated OTA from iOS8.1 to 8.1.1 yesterday and all things fine on my 4S.
Happy with the update

This morning, I connected my 4S to my Windows 7 PC with iTunes 12.01.26 to find iTunes wants to either 'Restore from a previous backup or set up as a new phone'.
I cannot get any beyond this option without doing either of the options provided to gain access to my iTunes data. Trouble is, my last backup was on iOS 8.1 and now on 8.1.1

is there a workaround for this? <Help! appreciated>

or is this an issue?

I seem to remember iOS7.x.x had an issue with iTunes very similar.

UPDATE:
Ok, Managed to sort this albeit a bit of a pain.
Uninstalled iTunes and all apple software associated with iTunes (bonjour etc..)
Downloaded iTunes and reinstalled. Everything fine now. <phew>

Still, it begs the question, why does this happen on an OTA update?