Cannot update to iOS4.... stuck at backup for over 5 hours now.

I've been trying to update my 3G to iOS4 all day now, and its just sitting at the backup screen. I backed it up manually (right-click iPhone, backup) right before this, and it was fine, didn't take longer than usual. Then I told it to update to iOS4. It did the whole 'preparing for backup' thing, then went on to the actual backup. It got to about ~10% of the progress bar, and got stuck there. I left to go do somework and let it sit there and 'backup'. 5 hours later, I got back, and its still at the same ~10% spot. The progress bar does the whole windows scrolling effect so its not frozen.... What's going on??

OK, I had the same issue about it backing up for long time. I cancelled.
I read in one of these posts to back up prior to installing 4.0. Then hit restore. I did that and I now have 4.0 on my phone. But guess what- the restore went to factory defaults. No data, no apps, no photos, no music.
They are in my iTunes, but I have to manually select if I don't want them all on my iPhone.
There was no option to LOCATE the back up I had just done ... where is it? Do I really have to reinstall everything?

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