Installed OS 3.1.3
Install gave me an error
iPhone no longer recognized by iTunes
Device Manager showed 2 listings of Apple Recovery
iPhone itself was stuck in Recovery Mode (picture plugging into iTunes)
I don't think this issue is OS-specific. I'm using Windows 7 and everyone else is reporting various other OS's having this problem, so I think it's happening on all Operating Systems. However, I do think it is OS related, meaning Apple iTunes/iPhone software and OS software are not communicating correctly.
I just loaded OS 3.1.3 on my iPhone this week, and the update stopped midway through, gave me an error (sorry, forget the error number, thought I could just quickly recover from backup so I ignored it) ... then after clicking "ok" on the error window my iphone disappeared from iTunes. I could not get iTunes to recognize it after that. Nor did my iphone show up on the computer drives listing like it always does. The iphone screen itself was stuck on the picture to plug into iTunes (recovery mode). So my iphone essentially was lost. I attempted all the common fixes, everything in this thread I tried, including the 10-second button rule, I won't bore everyone with the specifics, it's all listed in this thread. Did them all. The only thing that worked was jjkboswell's fix of hooking it to another computer with iTunes. I did this (Windows XP computer) and it worked. It restored the iphone to factory default and then loaded OS 3.1.3 ... but now I needed my iphone backup so I could restore all my old data and music and apps. Also, this was a friend's computer I was borrowing, I didn't want to have to borrow the same friend's computer every time I want to sync my iphone. So here is how I recovered my computer with iTunes and ultimately restored my iphone with the backup on that computer. (This is all Windows 7, so any other version of Windows you have the same options just might have to take a different route to get to the folder or option; unsure about the Mac guys)
1) Deleted iTunes and all Apple software completely, (you can't half-do it, make sure all components are deleted specifically as described, in the exact order, perform all the file deletions, recycle bin empty, reboots, as listed on this page)
http://support.apple.com/kb/HT1923
Okay, let's say you get to a point where the OS doesn't allow you to delete something. Don't skip that step! Download and use msicuu.exe to force deletion of that program/file. (I'm sure Apple has a similar program for Mac users)
http://support.microsoft.com/kb/290301
2) Reinstall iTunes (FYI, Quicktime is also installed subsequently, it is a required program if you run iTunes)
http://www.apple.com/itunes/download/
If the iTunes install aborts midway through, go back up to Step 1 and repeat the entire process. I know when it aborts it tells you "nothing has been installed or changed on your system" but if you redo Step 1 you will find that is not true, you will need to delete some programs and files then you can go back and repeat the install process again
3) Now comes the critical part, Device Manager. Every OS is a little different, how to get to Device Manager, if you don't know, just Google it. I'm on Windows 7, I right-click the "My Computer" icon on my desktop, then click "Manage", then on the left panel I click "Device Manager", now you will be in the Device Manager and you have a listing of all your hardware components
Plug in your iphone. Now you will see 2 listings that say something like "Apple Recovery" Mode, right-click, then click "uninstall", you need to do this to both, they should disappear now
Next, you will expand the "Universal Serial Bus Adapters" at the bottom, which will give you a long listing, and look for the USB related devices. My laptop has 2 USB ports, both are called "USB Composite Device" in this listing. This is the tricky part because everybody is going to have different hardware from different manufacturers and the listing is going to be called something different but if you can figure out which are your USB ports then you are in business! I right-click the "USB Composite Device" the one associated with the port I have just plugged my iphone into, and I click "Update Driver Software", which then takes you to the window where you can manually direct it to the folder where you have the iphone Device Driver stored. (FYI the iphone Device Driver was loaded when you loaded iTunes in Step 1) The default directory for the device driver is
C:\Program Files\Common Files\Apple\Mobile Device Support\Drivers
C:\Program Files (x86)\Common Files\Apple\Mobile Device Support\Drivers (for 64-bit systems)
If you want to verify the Device Driver was loaded, navigate on your computer to the directory above and you should see the file USBAAPL.SYS
Once the driver has finished updating, the "USB Composite Device" (or whatever yours is called) will disappear and you will now see "Apple Mobile Device USB" ... the iphone Device Driver is installed!
4) Now fire up iTunes. This is a new load, so you may need to sign-in. Verify your old backup is still there, if you had one.
Edit
Preferences
Devices tab
You will now see all your old backups listed here (FYI ... deleting and reloading iTunes does not delete your backups, they are safe, as you can see here)
Okay, feel free to close the Preferences window now
Your iphone may or may not be recognized by iTunes ... if not, unplug your iphone and plug it back in, see if iTunes registers your iPhone now. If it does, go ahead and choose to recover from the backup you have saved or you may reset to factory default. You shouldn't have to load OS 3.1.3 if you ended up reseting to default from another computer like I did before Step 1, OS 3.1.3 will already be loaded ... but if not then you may have to load OS 3.1.3 and quite possibly you could get another crash and have to start over, this time recover the iphone from another computer first, then start at Step 1 and go through the steps.
If iTunes gives you "iphone could not be restored error 1602" then same thing, start at Step 1 and make sure you are following each step exactly as outlined (I got this error first time through because I tried to shortcut it, then did it properly next time around and all worked fine)
if iTunes gives you "itunes could not connect to this iphone because an unknown occurred (0xE800000A)", Congratulations! you are almost there! (this is a good thing, it means your iphone is now recognized but one last bug needs to be worked out)
unplug your iphone
exit iTunes
Go to C:/Program Files/iTunes/
right-click the file iTunes.exe
click Properties
click "Compatibility" tab
under "Privilege Level" check-mark "Run this program as an administrator"
click Apply
click OK
now, back in C:/Program Files/iTunes
double left-click iTunes.exe to start iTunes
plug in your iphone (it should now be recognized)
once you have verified your iphone is working with iTunes again, exit iTunes and do the same steps as above, this time uncheck "Run this program as an administrator (iTunes only needs this kickstart the first time, after that you can run iTunes as a regular user), and verify that iTunes is still working, make sure you verify your desktop shortcut is also working still
That's it, that's all the steps I performed to recover my iphone and my iTunes install on my computer. I think ultimately it came down to multiple bugs hitting me at once, and the combined steps you see above are a compilation of each repair as I went through the recovery stage. I hope this helps someone having the same issue. I went with a reset factory-default iphone for several days and I now realize how dependent I am on this little device and the data I carry in it so I feel for you if you are stuck like I was. Thanks to the previous posters in this thread for giving me a jumpstart, this thread was very helpful ... jjkboswell, much thanks, you had a lot of good input in your posts.