Download iOS 5 Firmware Directly from Apple’s servers
Rather than hit the “Update” button under “Summary” in iTunes, instead download the firmware for your device directly from Apple.
Make sure to download the software to a place that you’ll remember. Once download is complete, hold down Alt (Windows) or Option (Mac) and click “Restore”in iTunes. You’ll then be asked to point iTunes to the correct software, which you just downloaded. Your update will then begin.
NOTE: This method will delete all your apps, music, contacts, etc, as it is a complete restore to factory settings, so make sure your device is backed up before proceeding.