iTunes 11.x while syncing with iPhone of IOS6.0 keep failing

I am at my end's wits and needs help to understand and solve.

I have Intel PC running Windows 7 (64 bit), iPhone 3GS running IOS 6.x, and MS Outlook (office 2010). After upgrading toiTunes, somewhere something happened. iTunes recognises the phone, connects to it. However, when I try to 'sync', or 'backup' or 'transfer purchases from iPhone to iTunes - it progresses to step 3 and then pops out the following error

"iTunes could not backup the iPhone 'Sumans-iPhone' becasue the iPhone is disconnected"

I have completely removed iTunes and associated componets and reisntalled it couple of times. NO CHANGE in behaviour.

Incidentally this issue dfoes not compel up onother Toshiba Laptopm running same OS and iTunes.