IPhone 3GS wont restore, missing music

Nothing but problems with my new iPhone 3GS
Firstly after the second sync all the music was replaced with "Other" data - and the iPhone was saying it had no music content. Tried resyncing it with iTunes and got the message that there was not enough space on the iPhone.
Then attempted a restore - but it gets stuck after downloading the software update while verifying the restore with apple. The message is Unable to restore - unknown error.
So I now have an iPhone which is unusable and stuck in recovery mode.
Also tried restoring on both my imac and macbook pro but both return the same problem.
Im now very disappointed and back to using my old nokia until I can get this sorted out - any suggestions.
Thanks,
Isaac

An update:
Spoke with the iPhone technical support today who found that the error message my iTunes is generating is because iTunes cannot connect to the apple server - which is strange cause i've always been able to use iTunes normally. Suggested that I open ports 80 and 443, and check I can ping gs.apple.com (which I could).
Opening port 80 was difficult. After setting the port forwarding on the router (and even placing it in a DMZ just to be sure) the port was still not open and because of leopards firewall required being manually edited in terminal with:
sudo ipfw -q add 10 allow tcp any to any 80 in
sudo ipfw -q add 20 allow tcp any to any 80 out
However doing the same with port 443 (and turning back to my mac off - which I think normally listens on this port) I was still unable to open this port.
iPhone support thinks its a problem with the mac firewall seeing I cannot connect to their servers (despite being able to use and download etc from the itunes store), imac support thinks its the ISP, and my ISP thinks its either of the apple products - they assure me that the only port they close at the ISP end is port 25 and with the computer in a DMZ then its not their issue.
In addition:
tried the suggestions above
-holding down sleep/home, then home etc
-connecting whilst holding down home
-creating a new user account and attempting to restore from there
-deleting itunes application and the AppleMobileDevice files then reinstalling
Either way, and after a half day of googling, an aspirin, and being handballed around between apples various support departments i'm still back at square one with an iphone / paperweight "unable to verify restore with apple - unknown error (3014)".
Hope someone has some suggestions - apple is clueless about this it seems. Im sure there must be more people with an iPhone stuck in recovery mode having the same problem.
Apple suggested that I take the phone back to Vodafone in NZ and have them restore it - dosnt fix the problem though. This happened on the second day of use - probably going to happen again - and what if I need to do another restore sometime?
Thanks
Isaac

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