Error -1 is most often a very bad hardware error. But the steps are to try Restoring iPhone on another computer. If still Error -1, make Genius reservation or set up service and take iPhone to Apple for resolution. If this is not convenient, since this is brand new iPhone you could always take iPhone, box and everything that came with it along with receipt and return it to where you purchased it for full refund, and then buy another iPhone.
Thanks for yuour feedback. I disabled my AVG 2013, and the phone seemed to download the update fine, and asked me to restore using my last backup, which I believe is a good one. It has been running now for almost 2 hours on a 16GB phone, so I know something is still wrong? I need to shut down this rerstore.
Thanks for your help, getting me going in the right direction. I finally got everything to work with a call to Apple. I had to disable my AntiVirus(AVG), then turn off auto sync. Delete all my prior backups, EXCEPT the one I wanted to restore from. Once I did that and the phone was in restore mode, the rest went fine. Thanks