Adam Albright has the solution!
To look in the ~/Library/iTunes/Mobile Backups folder to find the Manifest.plist folder, and delete entries for apps that might be causing the problem.
I remembered that a little while ago, I had started getting an error message while syncing and updated app (Sleepmaker or something- couldn’t remember which, precisely, but knew that it was a white noise app). So, I went to the Manifest.plist folder, and removed the entries for the couple different flavors of the Sleepmaker app that I had installed.
Then, reconnected the iPhone, and clicked “Continue Restore” once again when it reported that there had been an interrupted restore. This time, it went through fully! Took quite a while (~1 hr) to copy all my media onto the phone, but now it’s all there! Hopefully this will help others who might in the same situation…
via Apple – Support – Discussions -.
If you have Windows XP you may want to read this thread.
In my Windows XP the manifest.plis file was in this folder:
C:Documents and SettingsAdministradorapplication dataApple ComputeriTunesMobile Backups87XXX6HDXXK