I personally have never had an issue with downloading updates to a device via wifi. My issue is with the Windows 7 version of iTunes rev 10.6. I had previously completed the steps in Wiclee's suggestion. This did not resolve my connectivity problem. When I refer to connectivity, I am specifically referring to Windows 7 version of iTunes 10.6.0.40
I went a step further and disabled the windows firewall, and totally removed Norton 360. This left my system very vulnerable, but I did so in hopes of finding the root cause of the problem. No matter what I try, I cannot connect to the iTunes secure store link. If I run the network connectivity diagnostic under the help menu, the secure link to iTunes store fails. I believe this is the source of the issue. I am perplexed based on the fact that the only change to my system was the update to iTunes 10.6. I wish I had the old version 10.5 back because it worked.
Suffice to say, if the Apple Senior Technician folks cant figure out the problem, then my only hope is to wait for the next release of iTunes and try again. For now, I have removed iTunes 10.6 and purged my Windows 7 system of all apple software. Everything continues to work perfect (all software programs) on my system. The absolute only problem I had was with iTunes 10.6.
It is worth noting that I made multiple phone call attempts to Apple and spoke with several senior technicians. All of which said they would call me back after speaking with the software engineers. I am still waiting. No one from Apple has tried to call me, or send me an e-mail.