What happens when your iPhone is completely non-responsive, even when connected to iTunes via the USB cable? Don't worry, it's not a time to panic, just time to put your iPhone into Recovery Mode. Here's how!
Make sure you have the latest version of iTunes (8.0.2)
Plug your USB cable into your computer.
Turn your iPhone off by holding the power button down until you see "slide to power off". Do as instructed.
Now press and hold the Home button while reconnecting the USB cable to your iPhone. After iPhone is connected it should power on the device.
Continue holding the Home button, you will see the Apple logo appear and then finally a "Connect to iTunes" will be displayed, now is the time to release the Home button. You will then see the following image:
You have successfully put iPhone into Recovery Mode. Now you will have to restore from a backup file or setup as a new iPhone.