Incorrect appleid or password

Hi All,
I just upgraded my iphone 4 to 5.1.1 and going through the setup process.  The phone is asking me my Apple ID and password.  So, I enter myappleid and password.   Then it says "Update Apple ID", and "For your security, your Apple ID login must be an email address."  So, I enter [email protected] Then it says, "Try another Apple ID.  This apple ID is already being used.  If this is your account, reset a forgotten password at iforgot.apple.com."
I gave it the correct appleid and password.  I know this because I can log in to my Itunes and to the Apple Support Communities using it.  However, my iphone won't take it.  It seems to me that  the new operating system requires all Apple IDs to be emails even if your current id is not an email.  But when I try to update it to an email, it is checking against all the emails in its database and saying mine is not available cause it is already being used by me!
Any suggestions? 
thanks!!!
z

What a mess.
If I understand you correctly, you were happily using myappleid for years and life was good. Now you want to set up your iPhone with iOS 5.1.1 and it insists your Apple ID must be an email address "for your security" of course. As far as I know there is no way around that requirement; it must absolutely be of the form [email protected].
Problem is, someone already is using [email protected] and it's not you. It's a totally different Apple ID used by someone else and therefore unavailable to everyone else, most importantly you, notwithstanding the fact it really is your own email address.
Is all this correct?
If so, this should not have happened, and it is indeed a problem. The only solution I can think of is to change your Apple ID here: https://appleid.apple.com/ Unfortunately you will need to change it to something other than [email protected]. If you do not already have another email address you will need to obtain yet another email address. You will need that email address ready because the very first thing it will tell you is what you already experienced trying to update your Apple ID on your iPhone.
Hopefully someone more knowledgeable about Apple IDs than I will have a better suggestion to consider. Failing that, before you resort to my very unappealing proposed solution, contact iTunes Store support here:
http://www.apple.com/emea/support/itunes/contact.html
Explain your situation with care and see if they can come up with a better idea. Be patient as their initial response may seem to have been generated by computer; a 1970's vintage one at that. A logical solution, if one exists for your problem, may be several days in coming. An ideal solution would exist if [email protected] is a dormant account that could be quietly terminated, making it available to you. However, this may not be acceptable to Apple nor would it be to the holder of that account.
If you have AppleCare and are still within the free phone support period, call them first as you are more likely to converse with a humanoid. If you do not have AppleCare this may be a good reason to consider it, if you are still eligible.
Good luck.

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