I assume you are using iTunes Ver 10?
I have worked around similar USB problems like this by simply using another USB port.
If that works I would suggest a utility called USBDview and remove any old iPhone USB drivers. You may have to reinstall iTunes Ver 10 afterwards to get the right drivers back.
http://www.nirsoft.net
Don't plug you iPhone in until you have reinstalled iTunes.. Oh and don't un-install any previous version of iTune or you stand a chance of losing your backups.
Message was edited by: HolmanGT
Message was edited by: HolmanGT