I was searching all over for an answer to this and accidently figured it out myself. I'm not sure which of the two things did it, but here's what happened. I was trying to update my iphone to iOS 5.0.1, but several times froze on the "preparing iPhone for restore" text on itunes. I tried EVERYTHING, changing cables, changing USB ports, redownloading the iOS, restarting the computer, unplugging all other USB cables (except mouse and keyboard). Simply, nothing worked. Then I read on some jailbreaking thing accident that you can do a shift restore, tried holding shift clicking restore and found I get to choose the iOS file myself. I looked up how to find the files, I suggest looking it up yourself I can't remember how to do it on other systems. But on XP go to C:\Documents and Settings\<User>\AppData (or Appliacation Data)\Apple Computer\iTunes\iPhone Software Updater You will see a file(s) that looks like this: iPhone3,1_5.0.1_9A405_Restore You might have to enable "View hidden files and folders under folder options. Anyways so I see two different files here try one, and it says it is incompatible, so I try the next one and IT WORKS!!!!!!!! I think I tried it normally by just hitting restore like 10 times with no luck. Anyways, this made my night, hope it can help someone else out. Sorry if this post is in the wrong area, just thought I should put out the good news to those that have this issue.