Edit: After half day, my wife’s Mac started having the same problem. I have then applied the solution that I found in the Apple
Why are you getting a iTunes Error 3200 When Trying To Update To IOS5
We have had a few of you contact us asking why you are getting the iTunes error message An internal error occurred Error 3200. We looked in to this problem and it is not just you , It is currently happening to hundreds of people worldwide.
The main reason for this is because of Apple’s Servers being jam packed and iTunes can not verify your update with the Apple servers. We are suggesting you read some of our recent articles and then try again shortly when there is some free space on Apple’s Servers