The device driver should be installed as part of the iTunes install. Do you have iTunes 7.5? If not, I'd recommend installing it. If you do, I'd try and uninstall iTunes, delete the iPhone from the device manager, then reboot and reinstall iTunes 7.5. I had a really weird problem where iTunes would lock up when I connected my iPhone and I had to remove iTunes, the device in device manager and all the settings on my computer, reboot and reinstall before it would work. So I'd give that a shot.
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