I am currently running iOS 4.3 on my iPhone 4. iOS 4.3.1 is available so I tried to update it, however once the 666Mb file has downloaded and iTunes starts to 'process' the file, iTunes displays an error advising my network connection has timed out and the whole process has failed.
I have tried this on 3 different internet connections (yes, downloading the update file every time) and I am getting the same error. I keep getting prompts to update the software...if only it would let me!
Most likely your security software is interfering with the download or the update. Reboot your computer, then disable the firewall and antivirus. BTW, what error message are you getting (including the number)?
I didn't know you had Kaspersky. Yes, that's the problem. It's a great product, but it can be overly protective. You should be able to configure it to allow the firmware update, but it might be easier just to disable it each time you update (which should only be a couple of times a year).