Re: Upgrade to ios 8.1 from ios 7.0.6
Unfortunately, you're holding down the wrong key on your keyboard. Instead of the "shift" key, you need to hold down the "alt / option" key, depending on whether you're on a Mac or PC. So while you hold down the alt / opt key with your left hand (finger), maneuver your mouse pointer with your right hand and click the Restore button at the same time. If done properly, a file chooser window will pop up to allow you to find your ISPW update for your phone. You should download it directly to your computer instead of having iTunes do it all and have it forever. By the way, before you update to iOS 8.1, make sure you do a full backup on your desktop, but a backup to the cloud would be ok also.
I just upgraded my brand new iPad mini 2 that I got at Best Buy yesterday on sale and also traded in my original first generation iPad mini. So yes, I went through the process. Oh, also make sure that your passcode and find my iPhone options on your phome are both OFF. They also recommend turning on your "airplane" mode so your phone isn't tring to multitask while about to get jailbroken.
Just take things slow... Make sure you read and understand all the steps you need to do. This was probably my 5th or 6th different time I've done this. Each time was different and unique but this Pangu 8.1 was probably about the quickest and easiest I've ever had done so far.
Good luck, you'll be fine