Apple ID will not accept email address

PLEASE HELP ME BEFORE I GO SPARE!!!!
Have updated my iPad to latest OS. When turning on for first time it is asking for my Apple ID and password. Enter these and fine to move on (noting that my Apple ID here is NOT my email address).
Next screen is called "Update Apple ID" and asks for an email address. I put in my email address that is linked to my account when using the "appleid.apple.com" website, but it now complains and will not let me continue. Error message is: "Try another Apple ID. This Apple ID is already being used. If this is your account, reset a forgotten password at iforgot.apple.com"
There seems no way around this. I have been through the reset password that was suggested, but only thing I've been able to achieve is now having a password that is different to all other ones I use and will now most likely get forgotten!  Even through the "appleid.apple.com" it will not let me change my Apple ID to my email address as it states that it is already in use (call me stupid, but I know it's in use, it me!!).
So I'm completely stuck in a closed loop with no escape. HELP!!!!!
"if" I had previously created a user with my email address, then surely the system would not have allowed me to set my email address to be the same as that other user. However, I don't recollect creating that user, and what's more, I cannot log in to that account as I can't guess the password. I've even tried getting the system to send me a reset password for that account, but it then simply resets MY password for MY account, which, as mentioned above, is beyond a joke.
Apple need to get their heads around passwords / email addresses / apple id's - if they have tightened up the security policies, then there are some loose ends that need correcting. I can't even see anywhere that would let me delete an unwanted apple id account.
Does anyone have any ideas on how to fix this?
Thanks, a very very frustrated user!

Not trying to step on Philly's toes on this one - but If Philly's suggestion doesn't work, I would contact Apple. There have been a few reports of this Apple ID problem after updating the iOS in the past few days. Personally, I don't get it. If the Apple ID worked before the update, there is no reason why it should not work after the update.
Contact Apple about ID issues
http://www.apple.com/support/appleid/

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