Just keep at it.....
I had exactly the same problem for more than 2 days now (with the identical error message you have).
I tried on 3 different macs, on diffent USB ports, and also on a PC, with no difference in behaviour. I also tried on 2 internet connections, one without a firewall - again, no difference.
Eventually, after the 2 days and countless attempts, the ipad restored IOS 5 normally on the original mac in its original state. So I can confidently state it was nothing to do with USB ports or with the firewalled state of the mac.
So just keep trying and trying until it works........
I should point out that I did lose my apps even though itunes went through the restore apps phase.... but I'm happy that the ipad isn't not bricked anymore. I'm not sure I dare move my mobileme account to icloud yet......
Scoobs
Below some technical details for anyone who might be able to explain this problem.....
It was originally giving up after trying to validate the firmware update, the error in the log being related to the baseband firmware :
2011-10-15 12:57:55.000 iTunes[3341:1d4bb]: amai: AMAuthInstallBasebandHandleUpdaterStatus: commandAccepted: NO
2011-10-15 12:57:55.000 iTunes[3341:1d4bb]: amai: AMAuthInstallBasebandHandleUpdaterStatus: outputDict is NULL
2011-10-15 12:57:55.000 iTunes[3341:1d4bb]: AMRAuthInstallDeletePersonalizedBundle
2011-10-15 12:57:55.000 iTunes[3341:1d4bb]: <Restore Device 0x7fc29976f800>: Restore failed (result = 1)
2011-10-15 12:57:55.000 iTunes[3341:1e343]: iTunes: Restore error 1
2011-10-15 12:58:01.000 iTunes[3341:307]: device connected (isDFU = 0)
2011-10-15 12:58:01.000 iTunes[3341:307]: iTunes: SCEP 2
2011-10-15 12:58:08.000 iTunes[3341:307]: device disconnected (isDFU = 0)
2011-10-15 12:58:08.000 iTunes[3341:307]: _AMRecoveryModeDeviceFinalize: 0x7fc2994e3c10
2011-10-15 12:58:14.000 iTunes[3341:307]: device connected (isDFU = 0)
2011-10-15 12:58:14.000 iTunes[3341:307]: iTunes: SCEP 2
Now, I'm a happy boy as the Baseband update okay:🙂
2011-10-15 14:18:35.000 iTunes[3341:1df9f]: amai: AMAuthInstallBasebandHandleUpdaterStatus: commandAccepted: YES
2011-10-15 14:18:35.000 iTunes[3341:1df9f]: <Restore Device 0x7fc2950ec8a0>: operation 49 progress -1
2011-10-15 14:18:35.000 iTunes[3341:1df9f]: <Restore Device 0x7fc2950ec8a0>: operation 51 progress -1
2011-10-15 14:18:37.000 iTunes[3341:1df9f]: <Restore Device 0x7fc2950ec8a0>: operation 32 progress -1
2011-10-15 14:18:37.000 iTunes[3341:1df9f]: <Restore Device 0x7fc2950ec8a0>: operation 29 progress -1
2011-10-15 14:18:37.000 iTunes[3341:1df9f]: <Restore Device 0x7fc2950ec8a0>: operation 29 progress -1
2011-10-15 14:18:37.000 iTunes[3341:1df9f]: device returned AMR error 0
2011-10-15 14:18:37.000 iTunes[3341:1df9f]: <Restore Device 0x7fc2950ec8a0>: Restore succeeded