When I did my iPhone and my iPad I made sure that I told iTunes to "download only" rather than "download and update", that way I could control how and when it updated.
With the iPhone, once it had downloaded, I tried the standard way of clicking on Update... It spent ages backing it up (far longer than a standard backup), and then failed for the server error many people kept getting.
After several attempts, I tried a different way (after first doing a normal sync & backup)... Shift-Click on Restore, and browse to the *.ipsw file itself (on Windows... "C:\Users\<Name>\AppData\Roaming\Apple Computer\iTunes\<iDevice> Software Updates"). Doing this skipped the horrendously long back up (which isn't needed so long as you've got a recent normal backup). I then did the same for the iPad, to avoid the horrendously long back up on the that too.
As you're now stuck in the backup though I'm not sure if you can come out of that and try it my way.