Trying to update iPhone - iTunes cannot contact the server...

Question

I updated the iTunes software to the newest version and I'm trying to update my 2g iPhone to the new version. When clicking the "update" button I get this error message:
iTunes could not contact to the iPhone update server because you are not connected to the Internet.
Make sure your Internet connection is active and try again.
Well... my internet connection certainly works. I'm writing this message with the same computer. I also tried disabling wireless connection and tried with lan connection but still the same error. iTunes is able to connect to its update server but the iPhone update hangs. What can I do? I hate this kind of invalid error messages! Come on Apple!

Answer 1

Here is diagnostics:
Microsoft Windows XP Professional Service Pack 2 (Build 2600)
Dell Inc. Latitude D820
iTunes 7.7.0.43
QuickTime 7.5
CD Driver 2.0.7.3
CD Driver DLL 2.1.1.1
Apple Mobile Device 2.0.0.33
Bonjour 1.0.4.12 (118.4)
iTunes Serial Number 3DB5169EBCE58EFB
Current user is an administrator.
The current local date and time is 2008-07-11 22:28:26.
iTunes is not running in safe mode.
Video Display Information
NVIDIA Quadro NVS 120M
** External Plug-ins Information **
Plug-in Name: Last.fm AudioScrobbler
Plug-in Loaded: Yes
Plug-in Version: 0.0.1
Plug-in File Version: 3.0.1.0
Plug-in Path: C:\Program Files\iTunes\Plug-ins\itw_scrobbler.dll
** Network Connectivity Tests **
Network Adapter Information
Adapter Name: {6EA624CD-79BB-4835-B73D-28579D8849FB}
Description: Intel(R) PRO/Wireless 3945ABG Network Connection - SecuRemote Miniport
IP Address: 192.168.2.103
Subnet Mask: 255.255.255.0
Default Gateway: 192.168.2.1
DHCP Enabled: Yes
DHCP Server: 192.168.2.1
Lease Obtained: Fri Jul 11 21:57:30 2008
Lease Expires: Tue Jul 15 21:57:30 2008
DNS Servers: 192.168.2.1
192.168.2.1
Adapter Name: {AA9E0DD4-09CB-45C3-B4C7-5CF9E6DE82E9}
Description: Broadcom NetXtreme 57xx Gigabit Controller - SecuRemote Miniport
IP Address: 0.0.0.0
Subnet Mask: 0.0.0.0
Default Gateway:
DHCP Enabled: Yes
DHCP Server: 192.168.2.1
Lease Obtained: Fri Jul 11 21:52:15 2008
Lease Expires: Tue Jul 15 21:52:15 2008
DNS Servers:
Adapter Name: {3CD21523-492D-4F23-86B9-C63F5F71D12D}
Description: Bluetooth Personal Area Network from TOSHIBA - SecuRemote Miniport
IP Address: 0.0.0.0
Subnet Mask: 0.0.0.0
Default Gateway:
DHCP Enabled: Yes
DHCP Server:
Lease Obtained: Tue Jul 15 21:52:15 2008
Lease Expires: Tue Jul 15 21:52:15 2008
DNS Servers:
Active Connection: (none)
Connected: No
Online: No
Using Modem: No
Using LAN: No
Using Proxy: No
Firewall Information
Windows Firewall is off.
Connection attempt to Apple web site was successful.
Connection attempt to iTunes Store was successful.
Secure connection attempt to iTunes Store was successful.
Secure connection attempt to iPhone activation server was successful.
Last successful store access was 2008-06-26 10:54:35.
** iPod/iPhone Connectivity Tests **
iPodService 7.7.0.43 is currently running.
iTunesHelper 7.7.0.43 is currently running.
Apple Mobile Device service 2.0.28.0 is currently running.
Universal Serial Bus Controllers:
Intel(R) 82801G (ICH7 Family) USB Universal Host Controller - 27C8. Device is working properly.
Intel(R) 82801G (ICH7 Family) USB Universal Host Controller - 27C9. Device is working properly.
Intel(R) 82801G (ICH7 Family) USB Universal Host Controller - 27CA. Device is working properly.
Intel(R) 82801G (ICH7 Family) USB Universal Host Controller - 27CB. Device is working properly.
Intel(R) 82801G (ICH7 Family) USB2 Enhanced Host Controller - 27CC. Device is working properly.
FireWire (IEEE 1394) Host Controllers:
OHCI Compliant IEEE 1394 Host Controller. Device is working properly.
Connected Device Information:
Meitin iPhone, iPhone running firmware version 1.1.4
Serial Number: 7R743QFFWH8