Connect iPhone and Setup as new iPhone appears when it's not new

I connect my iPhone 4, and get the iTunes 2 options, Setup as new iPhone, and Restore. I don't want to reset my iPhone. It has pictures.  I tried Setup as new iPhone, and then it's starting synching to my husband's iPhone. I'm not sure what is happening, so I ejected and stopped the sync process.

I've checked the wire, but that's a good point, I'll see if I can find another cable to test this out.  I'm not sure what you mean by the external power symbol, the symbol I'm seeing is the plug in the battery, the same symbol I see when my phone is fully charged and plugged in to my computer or a charger.
I also made sure my computer wasn't asleep, same issue.

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