Check this link out it worked for me since nothing else would.
http://twitter.com/gimpbully/status/6881982822748160
Ill give the instructions just in case you dont like twitter...
1. connect the phone and begin the update/restore.
2. As soon as the first progress bar completes remove this line from /etc/hosts
74.208.10.249 gs.apple.com
Thats it, your phone will restore and you frustration will disappear.
Message was edited by: Dave01978