IPhone 4 won't restore after updating to ios 5!!!

After restoring iphone 4 with ios 5, itunes is stuck in "set up your iphone" mode asking me to restore from backup however whenever i do restore it goes back to the same screen asking me to do it again, all my contacts photos and other info syncs but no apps and cant use phone on itunes because it keeps telling me to restore from backup.. please help!!

So  I went to the apple store today since I was having the same problems, they reset it back to factory settings.  Plugged in Iphone to laptop and the same two options came up: 1. set as new Iphone or 2. restore.    So I restored thinking it would then synch...nope.
They told me if I didn't work to bring back my Iphone and laptop, it might be a problem with Itunes. 

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