Add me to the list as well. iPhone 4 "cannot restore... internal error" problem like all the rest. It successfully downloaded the update, backed up the phone, and then got to the "extracting software" step. Immediately after completing that, I can see the upgrade status quickly change to "Veryifying restore with Apple" (or something to that effect) and then it immediately crashes. The "verifying" message is only up for a split second, so I can't quite read it perfectly, but I'm pretty sure that's what it says.
So maybe it is something to do with the fact that the servers are intensely busy right now. After all, it took Safari almost 30 seconds just for me to log into the Apple website to type this post.