If you encounter this error "iphone software update server could not be contacted" or error 1638, while connecting iphone with itunes, then follow this post carefully. This would help you to update or restore your iphone without any problem.

Go to C:\Windows\System32\Drivers\etc
Open the file "hosts", which looks something like this

# Copyright (c) 1993-2009 Microsoft Corp.
#
# This is a sample HOSTS file used by Microsoft TCP/IP for Windows.
#
# This file contains the mappings of IP addresses to host names. Each
# entry should be kept on an individual line. The IP address should
# be placed in the first column followed by the corresponding host name.
# The IP address and the host name should be separated by at least one
# space.
#
# Additionally, comments (such as these) may be inserted on individual
# lines or following the machine name denoted by a '#' symbol.
#
# For example:
#
#      102.54.94.97     rhino.acme.com          # source server
#       38.25.63.10     x.acme.com              # x client host

# localhost name resolution is handled within DNS itself.
#    127.0.0.1       localhost
#    ::1             localhost
#    127.0.0.1 gs.apple.com 

Note 127.0.0.1 gs.apple.com bottom of the file. All you need to fix lies here.. if you encounter such an error then there might be no hash present before the ip address.
All you need to do is to add a hash(#) before the ip address and then hit the "tab" key.
Save the notepad.
Restart your itunes, now it should work normally.