While attempting to update in iTunes, shortly after the process begins, you will be prompted to enter the passcode on the iPhone. If you do not enter the passcode and are not paying attention to the update process, it will end and not complete and display this error. It appears to be some type of security error. Disconnect the iPhone from iTunes, power the iPhone off and back on, then connect it to iTunes again. Start the update process over again, watching the screen, and making sure that you pay attention to that prompt for the passcode, which gives iTunes permission to access the phone and do the update.