After checking the different responses from other posting i found one response that says try the RESTORE mode using iTunes and i did try it, it downloaded the software for maybe more than hour, then my phone went back to looping again, i guess that is happening while it is trying to download the software (it is just taking a lot of time). So i remove it again and did the recovery mode steps and suddenly i saw that it was indeed doing the restoration to the latest software version which is 8.1. After that has completed and saw that my phone has been restored went back to iTunes and check if i save a BACKUP and restore my data and settings from that latest BACKUP and i was to finally upgrade to 8.1 but i have to go through this process.
I do not have a choice coz i have a lot of stuff on my phone... i lost a few settings here and there and some pictures i took lately but other than that i should have recovered everything just by doing the RESTORE AND RECOVER from BACKUP.
Please follow the link... If you can't update or restore your iPhone, iPad, or iPod touch.