IPhone 3G restore to factory settings

I tried to sync my new iphone 3G to iTunes for the first time, but before I could start syncing iTunes asked for update and I started updating. At the end of 2 hours of update, I got a prompt for restoring iPhone to factory settings. I tried restoring but it fails continuously with error message code: 1015. When I referred the Apple website for trouble shooting, Apple suggested to update iTunes, update Windows, restart the system and I tried all these. But none seems to be working. Can anyone please let me know how to accomplish the task?

TS3694
Error 1015: This error is typically caused by attempts to downgrade the iPhone, iPad, or iPod touch's software. This can occur when you attempt to restore using an older .ipsw file. Downgrading to a previous version is not supported. To resolve this issue, attempt to restore with the latest iPhone, iPad, or iPod touch software available from Apple. This error can also occur when an unauthorized modification of the iOS has occurred and you are now trying to restore to an authorized, default state.  Very rarely this error is caused by a hardware issue and requires service.
Delete your ipsw file and let iTunes redownload it.

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