Ok you what you have to do is follow these steps. 1.Do a normal backup (right click your device and backup) .Don't forget to transfer your purchases. 2.After downloading the iOS software, go to restore but don't backup. If you get the error click restore again and don't backup. Do this around 3-4 times at it should work. If it doesn't just keep trying. It's way faster than clicking update and waiting 10min to backup. 2.5 Now you should have iOS 5 installed. 3.After restoring, transfer ALL your apps from your Mac/PC to your iOS device 4.Right click your device and click restore from a backup and choose your backup than you did at step 1. 5. Now iOS 5 should be installed and you should have all of your data and apps. In case iTunes added some unwanted apps to your device, simply delete them. step 6 ENJOY!