Some users have reported that they are unable to download the iOS 4.1 update, receiving error number 3259 and a message indicating “Network Connection Timed Out.”
Fixes (you may need to do all of these):
Slide to Unlock Several users have been able to fix this issue by simply sliding the “Slide to Unlock” button on their iPhones before attempting the update.
Disable antivirus software. If you are using Windows, try temporarily disabling antivirus software before applying the update.
Update router firmware. Check your router manufacturer’s website, and download and install any new updates for your wireless router. Alternatively, try plugging the ethernet cable directly into your computer.