Thanks for your responses
I only have my backup on this computer at work I dont have one at home as my laptop broke about a year ago and haven't replaced it as I very rarely used it and on this computer it wont let me set it as a new iphone the only option it gives me when I plug it in to the computer is to restore and update (which isn't working as it comes up with the error message), I have a saved backup from this morning where I backed it up before doing the update but that I know of there is no way for me to access it. Ive only had the phone just over a week so if I could restore it from the other phone and only lose a weeks worth of data then I would still do that but I cant see any way of setting it as a new iphone to install from the backup.
Tried re-installing itunes yeah but no luck, going to go leave work early to go into the apple store and see what they say