iPhone 5 Will Not Restore in Recovery Mode

Hi everyone,

I am currently having a pretty serious problem with my iPhone 5 16GB (iOS7.0.2). Today, I discovered that my phone was "searching" for cell service despite being in an area with good coverage. This issue continued for 5 hours. I tried to turn it on/off, a hard reset, turning "airplane mode" on/off, and even tried to restore it! When I attempted to restore it however, iTunes told me that "Find my iPhone" had to be turned off. Then, I kept getting an error that there was a problem deregistering it from my iCloud account. Finally, I decided (after creating a full backup) to put the phone into recover mode and try to restore it that way. Not only, did I get an "error (1)", I attempted that FIVE times and now my phone is stuck in recovery mode. Hopefully, I can get it fixed or else I'll have to replace the thing.

PLEASE HELP ME.

P.S. I might add that oddly, the phone still receives calls; my wife tried calling the phone, and it not only rings, it even goes to voicemail...