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I have been having the same issue for some time now. I have the feeling that it actually is a slow network connection as I am able to sync on off-peak hours. I also have the same issue if I use my iPhone over the same wireless network as my computer, but if I switch to 3G the phone syncs without problems.

Is there any way to extend the timeout limit? This has really been driving me nuts. If not, is there anyway to sync my laptop with my iPhone over Bonjour without destroying either the data on my computer or on my iPhone? That would at least let me get them both up-to-date.