HT1349 I was resetting my iPhone 4 and then the Apple logo came up and a a bar under it, then it got stuck. Please help

I was resetting my iPhone 4 and then the Apple logo came up and a a bar under it, then it got stuck. Please help

Hi
I have done lots of reading on th einternet ref this, i have now got as far as the Safe mode reboot, Boot the Iphone up in Safe mode, but now iTunes ask if i want to restore the iphone back to factory setting, which i want to do Please!!!!
as soon as it starts it then checks for any new software for the phone, at this stage it others me the new os5 software, but it drops out saying error 3194 again, it just keeps going around in a loop.

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