unknown error (1015) is showing on my iphone 3 when im trying to restore settings

1015 is related to attempting to downgrade your software which is not support by apple. Refer to below link

http://support.apple.com/kb/TS3694#error1015

Error 1015: This error is typically caused by attempts to downgrade the iPhone, iPad, or iPod touch's software. This can occur when you attempt to restore using an older .ipsw file. Downgrading to a previous version is not supported. To resolve this issue, attempt to restore with the latest iPhone, iPad, or iPod touch software available from Apple. This error can also occur when an unauthorized modification of the iOS has occurred and you are now trying to restore to an authorized, default state.