Are you using a Mac? If so, Safari automatically unzips the ipsw file, which you do NOT want. Instead, right click over the link and choose "Download Linked File As". This will ensure that the .ipsw file remains intact. Alternatively, you can use Firefox, which doesn't automatically unzip files.
Be sure to fully sync prior to proceeding. In order to install this firmware, you will have to do it manually by pressing the Option key (Shift under Windows) when pressing the "Check for Update" button in iTunes version 7.7. Then select the .ipsw file manually. If for some reason your download is a ".zip" file, rename it to ".ipsw" before proceeding.