STANALET is my hero too!
It's got to be an Outlook issue. So, for added measure, while iTunes was hanging with my iPhone connected (tryng to restore brand new iPhone 5s from backup on iTunes (from prevous backup of former iPhone 5 device)), I navigated to 'Info' along the top bar for sync options. Then I unchecked all categories that previously were selected to sync with Outlook.
And, when I went through the process STANALET provided, everything worked fine. No error box when I began to sync with iTunes and the sync finally progressed normally. I haven't tried to sync the items in the "Info" category with Outlook yet as I'm just waiting for iTunes to finish porting all my backed-up apps to my new iPhone.