Wait for iTunes to Download the iPhone Software
Once you've accepted the license agreement, iTunes will begin downloading the new iOS update. You'll see a message telling you that the software is downloading in the middle of the iTunes window, under the heading "Version."
On the left side of the screen, you'll also see rotating arrows and a number next to the "Downloads" menu item. (This is under the "STORE" heading in the left hand menu in iTunes.) The rotating arrows show you that the download is in progress, and the number tells you how many items are being downloaded.
Once the software has been downloaded, you'll see a message that iTunes is extracting the new update and another says "Preparing iPhone for software update." You'll also see a notification that iTunes is verifying the software update with Apple, and you may see drivers automatically installing. Some of these processes run quickly, while others take a few minutes. Accept all necessary prompts. Do not disconnect your iPhone during any of these processes.