You can brick your iPhone.
I have done it twice on my iPhone 4 trying to update to ios 5.0. I took the update to 5.0 on Itunes 10.0. When it finished Itunes states "The sim card inserted in this phone does not appear to be supported." The phone is totally useless, Itunes will not recognize it. A DFU does not work no matter how many times I have tried. Apple Tech support suggested to have AT&T check out the sim card. AT&T replaced it and their ITunes would not recognize it. Went in to an Apple store yesterday with an appointment and they tried to restore it with their special magic. They were unsuccessful in restoring it and gave me a line of ^%%@#% saying that the phone was defective and it was not until 5.0 was loaded that it was discovered. They said my phone was slightly out of warranty and they would replace it with another anyways. They told me to take the new one home and take the update again. There should be no problem in taking the update. I plugged the new phone in, it restored and then I took the update. Had a hard time hitting the enter button to launch the update. Guess what? The new iphone is broke also because the update failed and bricked the phone just like last time.
Does anyone have a clue as to getting this phone to restore so I can get back to my old IOS?