Indeed. Apple failed to properly test the iOS 5 release mechanism beforehand, therefore the error you are seeing is commonplace. I also have the same problem.
The best we can hope for is a new version of iTunes in the next 48 hours that will fix some of these bugs.
I backed it up a few days ago. Is there a way to get new firmware without backing up? I already have it downloaded via iTunes- I just don't know where it saved it to!