In order to fix KERNAL PANIC... force the iPhone handset into DFU mode (recovery mode)...
1. Force device shutdown.... by holding the power and home button.
2. Now hold down the home button for 10 seconds and then still holding the home button connect the iphone to the computer, release home when you see the itunes symbol or after around 10 further seconds.
3. At this stage you can connect it to iTunes and then do a factory restore.