Q: how to fix error 3259 when updating my ipod 3rd generation to ios 5?

Did you  already have a look at that, copied from http://support.apple.com/kb/TS3694?

Errors 3000-3999 (3002, 3004, 3013, 3014, 3018, 3164, 3194, and so on): Error codes in the 3000 range generally mean that iTunes cannot contact the update server (gs.apple.com) on ports 80 or 443. This may be because out-of-date or incorrectly configured security or firewall software is interfering, an old version of iTunes is installed, an entry in your hosts file redirecting requests to gs.apple.com (see error 1004 above), or because of your Internet proxy settings. If you are using a proxy, try without using one or with a known-good network. If that does not resolve the issue, follow iTunes for Windows: Troubleshooting security software issues. Error 3014 may indicate that you need to free up more disk space on the computer before trying to restore again. Error 3194 most likely indicates you do not have the latest version of iTunes installed Update to the latest version of iTunes. 

 

Try this link http://osxdaily.com/2010/11/18/itunes-network-connection-timed-out-error-3259-ip hone-update-fix/ provided by Opusworks in this discussion: https://discussions.apple.com/message/15426529#15426529