Try this.
1. Plug the iPhone into the computer while iTunes is running.
2. Press and hold down the Power button (one at the top) and the Home button for exactly 10 seconds (you may need a timer!)
3. While STILL HOLDING ONTO the Home button, release the Power button, and hold it for 15-20 seconds until you get a pop up on iTunes saying that your iPhone is in recovery mode.

Keep in mind that your iPhone screen should be completly blank, and should not be showing anything. Just restore the phone and you will be good.

That's exactly what I want to say.Once before my iPhone can't work no matter how I set it.Then I close it with force-to press the power button and home button at the same time for about 10 seconds,which brought my phone back again.

If you're on a Mac, do the following:

Open Terminal
Type "sudo nano /etc/hosts" without quotes, of course
Type in your password
Put a # in front of the IP addresses for gs.apple.com
Press CTRL + O to save and then CTRL + X to exit

Now, restore your iPhone from backup.

Hold Power Button and Home button for 15 seconds and then release buttons at the same time. Next thing you wanna do is hold home button for another 2 more seconds.

You actually need to get the phone into DFU mode not recovery mode i have pasted something below to follow.

The Main difference between the Recovery mode and DFU mode is iBoot. Recovery mode uses iBoot during restoring or upgrading your iPhone while DFU mode bypasses the iBoot so you can downgrade the current firmware because there is no iBoot agent during the DFU mode. About iBoot, iBoot is the bootloader on iPhone OS devices. iBoot acts on restore while iPhone is in Recovery Mode, iBoot makes sure that you are flashing a firmware version greater than or equal to a current one. If you are not, iBoot will not allow the restore to proceed. Because of this, firmware downgrading must be done in DFU mode.This means if you need to restore your iPhone to current version simply put the iPhone in recovery mode and iTunes takes care of the rest but if you need to downgrade your current firmware to lower one you need to put your iPhone in DFU mode. For example you can’t downgrade Firmware 3.0 to Firmware 2.2.1 without entering in to DFU Mode.

courtesy vinay

Try holding down the sleep/wake and home buttons (at the same time) for 6 to 10 seconds. That should get it out of recovery mode. Does iTunes see the device?

I got a iPhone 2g and I was upgrading the software yesterday but something went wrong and it couldn't. I tried unlocking and jailbreaking the iPhone again but that doesn't work. Its now in recovery mode and I cant get it out. I tried restoring it to its factory setting but it came up with a 'error 13'. Now it says the sim card cannot be supported. This has never happened before.