When iTunes offers to update, tell it to download only.
If that is successful, at least you have the download on your machine, instead of trying to re-fetch it every time there's a fail.
If you have to reset the phone in order to restore, then you will lose any data since your last backup.
If regular Recovery Mode doesn't work, then try DFU (Device Firmware Update) mode.
'Connect to iTunes' is Recovery, black screen is DFU.
To force the phone into DFU mode for restoration
- Plug into iTunes
- Turn the phone off
- Hold power & home for 10 seconds
- release power but continue to hold home
- wait for the computer to recognise the device
if the screen lights up while you're doing this, you didn't get to DFU mode & will have to try again; reports say the 10 seconds needs to be fairly accurate
iTunes should recognise it has a device in DFU Mode & restore should now work.
BTW - Golden rule for OS updates is…
in iTunes
- Sync
- Backup
- if you really want to be thorough
Download all app updates
Sync again
Backup again - Download update file
- Update
That way if anything goes wrong you can be back where you were in minutes.