Tried upgrading my wife's iPhone 3gs to Apples new 5.1.1. and it kept failing with Unknown error 6.
Took the to Apple store and their so called "Geniuse" (completely useless) said the phone is dead and tried selling us a new iphone 3gs for £100.
We came back home and left the phone on charge and it we saw the charging sign after a while, a proof that it is to dead as the useless Apple staff said in store.
After hours of googling and countless restore I was unable to find anything solid. Even Apple has so many users complaint on this but they are not bothered to respond or come out with a fix, even though their upgrade is causing issues.
This is very dark as if Apple wants it can get rid of a line of iphones by sending out an upgrade which effectively makes the phone dead. Just my opinion.
At last, we installed itunes in a different (third) laptop, connected our phone and did a restore.
And it worked like a charm.
Try installing itunes in a new PC or laptop and do a restore, hopefully it should work.