what drivers does your pc try to load? I ask because i use xp and when i put my iPhone in the cradle, the pc recognizes it as a camera device and asks me if i want to import the pictures. The next time you see this message just select the "select auto play defaults in control panel" when the control panel comes up it will give a bunch of different options for cds, dvd, cameras, etc...for pictures, select "take no action" and this will not happen in the future. Hope this helps..
Haha, yes, I am definitely connected to the net. I have no problems with my laptop, it's when I try to connect it to my desktop that it tries to install the drivers, and it doesn't find it, thereforee it isn't a known device in iTunes.
I was having the same problem, and found the solution after googling around a bit. You have to copy the usbaapl.sys file from C:\Windows\system32\drivers to C:\Windows\inf. If that still doesn't work try the attached inf file.