I have the same problem.

I have no solution yet, but I might contribute with some observations that might help.

I have two similar iPhone 3GS in the house. They are connected to two different laptops.

Same network, newest iTunes on both etc..

One updates fine.. no problem t all.

The second one (unfortunately mine :-( has failed like 6+ times. No use rebooting, using cabled network instead of WIFI, turning of antivirus, etc..

Both PCs are running Windows Vista.

The successful PC is a strong HP laptop. Vista 64 bit

The unsuccessful PC is a quite slow Fujitsu Siemens Lifebook P7230. Vista 32 bit

My best theory yet is that it is connected to PC performance in some way.. But iTunes has not failed before during normal downloads..   Strange..

Jan