Can't download iOS 5 to my old iPhone 4 - I get an error message saying I don't have enough space on my computer, but I know that I do.  How can upload successfully?  Or can I hook up an external hard drive to ENSURE I have enough space? If so, how?

I just tried to download the new iOS 5 software during my sync with iTunes on my computer to my iPhone 4, however, I got an error message saying that I did not have enough space on my computer to continue (even though I am pretty sure I do).  It offered me the choice of deleting much of the media on my iPhone in order to continue, which of course I declined.
How can I ensure that I have enough space on my computer to download the new iOS 5 software?  I don't want to delete anything on my computer and I have already defragged.  Can I just hook up an external hard drive which I am certain has enough space?  If so, how can I ensure that iTunes recognizes the external hard drive as the drive that it should be downloading the software to?
Thanks

Why, if it told you you have insufficient space on your computer, would it suggest making more space available on your phone?
At a guess, you have insufficient space on your phone. Installing software will typically require more space than the final size of the software, perhaps even twice or three times as much, for the installation process. You can easily dump some videos or music temporarily, and then synch them back in afterwards.

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