I downloaded the new iOS 5 update for my iPod Touch this morning, but when I tried to install the update, it told me that it could not restore, as there was an internal error. I hit google, and looked through numerous potential fixes, before finally deciding that I would have to force restore it. As a last resort, before force restoring, I decided to try a different cable, as the one I was using was a little frayed. I was pleasantly surprised when the iPod happily backed up and restored. The moral is of course, that if your iPod isn't updating properly, there might be a problem with your cable.