Where does iTunes save iOS updates?
On Windows XP
Documents and Settings\&lt;User&gt;\Application Data\Apple Computer\iTunes\iPhone Software Updates

On Windows Vista/Windows 7
Users\&lt;User&gt;\AppData\Roaming\Apple Computer\iTunes\iPhone Software Updates

On Mac
~/Library/iTunes/iPhone Software Updates

I believe that the updates do not delete after they are installed.

Via this iPhone FAQ article.