Thanks. Recboot got my ipad out of perma restore mode. My ipad is new, so I called Apple to find out what was up with the constant server error message and guy on phone had no real idea, just that logs of people were upgrading right now. RecBoot was a very easy solution.
I'm getting the same error. Then it asks to restore my iPad...bla bla. Then it's stuck in recovery mode. Use TinyUmbrella to kick it out of recovery mode, then WAIT a few days before updating the OS to 4.2. Clearly, Apple servers are fried right now.