Unable to download iOS updates iPhone 4

Im having issues with downloading iOS updates through iTunes. I tried downloading iOS 4.3 and recently 4.3.1 but no luck with either. Every single time I download an update through iTunes I get an error once the file has reached 100%. The error that I get is:
There was a problem downloading the software for the iPhone. The network connection timed out.
I also get an error code beside the update in iTunes. The error code is 3259.
I spent a lot of time on Google trying to find a solution but nothing. It seems like the common issue is that a virus scanner or firewall is preventing the file from being properly processed. I dont have a firewall or anti-virus enabled, so I know this isnt the issue.
Im on OS X 10.6.7 with iTunes 10.2.1 (latest versions for both).
To me this issue doesnt have anything to do with my iPhone. It has something to do with iTunes or a setting on my computer. Has anyone else experienced this problem?
iMac Mac OS X (10.6.7)