How to perform Upgrade or Restore a Iphone?

Enter recovery mode before connecting to itunes.

To enter recovery mode, connect the phone to the computer and press and hold the Power button (on top) and the Home button (on bottom front) simultaneously.
After about 15 seconds phone will appear to turn off,release the Power button but keep holding the Home button.
After about 15 seconds the computer and iTunes will detect the phone in recovery mode,

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and you can perform a restore.

IMPORTANT:

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If you just click the restore button, it will restore it with the latest firmware.
It's much safer to manually select firmware instead.
If you want to manually select a different firmware you can hold down SHIFT key (Windows) or Option/ALT-key (Mac) when clicking the Restore button, and it will let you choose firmware file.

Regards,Trigger