Force the phone into recovery mode & restore it:
Turn your phone off, then:
Leave the USB cable connected to your computer, but NOT your phone, iTunes running, press & hold the home button while connecting the USB cable to your dock connector, continue holding the home button until you see “Connect to iTunes” on the screen. You may now release the home button. iTunes should now display that it has detected your phone in recovery mode, if not quit and reopen iTunes. If you still don't see the recovery message repeat these steps again. iTunes will give you the option to restore from a backup or set up as new.
Thank you but this didn't work -- I did it several times, but it will not allow me to restore from a backup or even as new. Any suggestions? I'm told it may be a conflict between updating software and restore. It doesn't make sense to me, but heh....maybe it does to you? I would LOVE to get this fixed and NOT have to go the Apple store. I'll wait to hear back. Thanks again.........