Just to let everyone know, error 3200 is not caused by apple it is one of the generic 3000-3999 codes that you receive when you do not have iTunes 10.5 or your antivirus, spyware, or firewall is blocking ports 80 or 443, just temporarily disable your antivirus, spyware, or firewall and it will update as it should.
Working for me, repeating steps then work just need to be patient.THIS ACTUALLY REALLY WORKS!
I did it for like 5 times and now it just installed iOS 5 for iPad 2 !!
Try this people!!
add #127.0.0.1 gs.apple.com to bottom if not there. (all done as administrator) restart itunes. and comp. if doesnt work. then update phone. previous message was for downgrading. sorry