I thought I would post this message to help those running Windows 7 (or other versions of Windows) that might be having "USB Device Unrecognized" issues with their iPad when going to iOS 5. In my case it is an iPad 2.
Long story short... When upgrading to iOS 5 using iTunes 10.5, if you are getting "USB Device Unrecognized" error messages or Windows has trouble installing the USB driver with your iPad (or maybe another iDevice) and that device is connected to a USB hub of some sort that may have worked previously under iOS 4.x or earlier, the solution for me was to connect the iPad to one of my PC's main USB ports (as in the ones directly connected to the motherboard). For whatever reason, Windows is not able to recognize my iPad 2 running the first release version of iOS 5 when it is connected to the USB ports on my Dell 2408 LCD panel's hub. Even though this was never an issue with iOS 4.x
I am running Windows 7 (64 bit) with all the latest updates and I had an iPad 2 running iOS 4.3.5 and I always docked it and my iPhone 4 to my PC using the USB hub on my Dell 2408 LCD panel. I NEVER had any USB issues with either device until going to iTunes 10.5 & iOS 5.
The issue came up when I was doing a restore of the iOS 5 GM (which is the same as the final release of iOS 5) to my iPad 2. When I started the restore, the iPad 2 gets reset to DFU mode (or whatever mode it gets in to start the restore) and at that point Windows complained about the USB Device being unrecognized. After I gave up I told iTunes to do a regular restore back to the previous version (4.3.5) and Windows had no issues seeing my iPad and doing the restore connected to the same USB port.
So there appeared to be something about iTunes 10.5 or iOS 5 causes Windows to not be able to install the correct driver and have "USB Device Unrecognized" errors when my iPad 2 was connected to my Dell monitors USB hub. I should mention that my iPhone 4 running iOS 5 has no problems being connected to my Dell monitors USB hub. I tried all the suggestions that Apple has on their support section. Restarting the Apple Mobile Device service, Uninstalling the bad USB device under the Device Manager in Windows and rescanning for devices, un-installing and then reinstalling iTunes 10.5 and the other Apple software etc... etc... Windows still could not find the correct USB driver and couldn't recognize the device. Nothing worked or when it did it only lasted for a very short time. One of the 4 ports on my Dell finally installed the correct drivers but then it stopped working.
The solution was for me to use the built in USB ports that are on my PC itself. After I did that, Windows has no issues installing the proper driver for my iPad 2 and seeing it once I used the PC's USB ports.
For more detail see this post on the macrumors.com forums here...