Update and Jailbreak iPhone 4 IOS 4.3 to IOS 5.0
I was having same problem while updating iPhone 4 from 4.3.3 to iOS 5.0 and then i got the solution.
Updated my itunes but updating to ios 5.0 was not possible as apple is not signing 5.0 so i downloaded ios 5.0.1 and use sn0wbreeze to build custom ipsw put my iPhone in dfu mode and shift restore my iphone through itunes.
Bingo i was updated on i0s 5.0.1 with preserving baseband and then i used gevey ultra sim for unlock.
Hope this helps.