IPhone 3GS (iOS4) has iTunes/USB icon and won't even sync!

I have an iPhone 3GS. I was updating from iOS4 to iOS 4.0.1. in iTunes. At the end of the iTunes update I got a dialog box that says "iTunes has detected an Iphone in recovery mode. You must restore this iPhone before it can be used with iTunes." Then I got the iTunes with white USB icon on the face of my iPhone! When I try to sync with iTunes it says that I need to wipe my phone!
I restarted my computer. Repaired permissions. Rebooted the iPhone several times (and still get the iTunes/USB icon), tried to sync with iTunes. It won't work. I don't want to wipe my phone.
Help!

Try altering the tag for the ringtone: right-click on a ringtone in iTunes and select Get Info, go to the Info tab and make a slight change to the Artist, tap OK and try syncing again.  If it transfers to your phone do the same for the others.

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