this happen to me at 1.1.3 though, but here is the way i fix it.
Plug in phone, and sure itunes it yup and it semi sync your phone, then eject ((keep iphone plug)) and quite itunes, hold down top and home button intill itunes sync up with your phone again (( this will through your phone into recovery mode )) and then try to recover, if you do this and after you recover and getting error 1601 or whatever the numbers are, take sim card out and try to recover. This work for me to kick out and get my phone back to 1.1.1.
note* when you recover without sim card it will give an error about activation, once you eject your phone from itunes and replace the sim and reconnect it will go back to how your phone was saved last.