ITunes hangs when I connect my phone

Question

iTunes 10.2.1.1, iPhone 3GS iOS 4.3, Windows 7 SP1 64-bit.
Short summary: when I connect my phone to sync, iTunes hangs. If I let it sit for a minute or two it will eventually crash. If I disconnect my phone before this then iTunes starts responding just fine.
Details:
I just "flattened" my computer: formatted the drive, reinstalled the OS (and upgraded to Win 7 SP1 off of a DVD with the combined install). The computer waas fine before this, I just wanted to do some spring cleaning. My iTunes library is sitting on a server and has always been accessed over the network.
After the re-install of the OS I installed iTunes and pointed it at my library. That was fine. Then I connected the phone. At that point it was running iOS 4.2.something. I decided to upgrade to iOS 4.3. That seemed to work fine. After that when I connect the phone iTunes hangs.
I decided to reset the phone with the option to erase all content and settings. iTunes now worked ok. So I did an initial sync, telling it to set it up as a new phone. I did not sync any music at this point--I have ~22GB of music, it takes a long time to sync. This still worked fine. So then I sync'd the phone again, this time installing all the music. Again iTunes hangs.
I wondered if the library was screwed up. So I installed iTunes on a laptop (running Win 2008 Server R2), pointed it at my same library (still over the network). Then started over: reset the phone, clearing all settings & content. Sync from the laptop. It works fine. Sync the music from the laptop, it still works fine. It also seems clear that it's not a problem with the iTunes library.
Back to my original computer, the one with problems, my wife is using it logged in with her account and syncing her iPad without any problems. However, she has very little music on her iPad, maybe one ripped CD, whereas my iPhone has hundreds.
So the issue seems specific to this one computer & phone that has a lot of music on it. I never had a problem on the computer before, but that was iTunes before 10.2, iOS 4.2 (and earlier), Win 7 without SP1, ... So I've changed lots of things at the same time and am not sure which one really created the problem. Although I wonder if it's a problem with Service Pack 1. I don't have any concerns about a bad install of the SP, since I did a full install of the OS that already had SP1 integrated into it. But maybe iTunes 10.2.1.1 has an issue with SP1.
Any suggestions?

Answer 1

I've been following a Windows forum about the freezing problem. It happened to us and our three iOS devices immediately after upgrading Windows 7 64-bit to SP1. There were plenty of others with the same problem. Rolling back SP1 solved it instantly. Reinstalling SP1 caused it instantly. No amount of cleanly uninstalling and reinstalling Quicktime, iTunes, or any components helped.
Although I have an image of my system before SP1 that I could revert to, I didn't want to. Luckily *a temporary fix is to run iTunes in Vista compatibility mode*. The iOS device will now be recognized most, if not all, of the time. ITunes will run like molasses, but that's better than being unable to sync any of your devices ever again. (I could describe compatibility mode, but you seem PC-savvy.)
Here is the specific trouble I am addressing, although it is only part of your trouble. We plug in one of our iPhones or our Touch, iTunes hangs for a couple of minutes. Windows sees the device as a camera if applicable, but the device never appears in iTunes. It's worth repeating that Windows doesn't have trouble recognizing the device. The problem is with iTunes.
And yes, everyone tried all sorts of things with the Apple Mobile Device utility. People even tried "nuking" all their USB drivers and letting them get rebuilt on startup. The only temporary fix found so far is Vista mode, and the only permanent fix is downgrading the OS to before SP1.