So, here is what is supposed to happen. Tell me where things go wrong.
You plug the iPad in. It either tells you an update is available, or you click on the Update button on the Summary page and it tells you it is available.
You choose Download Only (I hope) and go on your merry way until it finishes.
Plug the iPad back in, and if it does not prompt you with an update available, you again click the Update button.
You have to confirm that you wan to do the update.
The iPad prepares for a backup, then does a backup. Takes a while.
When it is done it loads the firmware, Installs the firmware, then reboots the iPad. There will be various progress statuses on both the iPad and in iTunes.
After the reboot, when the iPad reappears in iTunes it should automatically Restore from Backup. When that is done the iPad reboots again.
Again, when the iPad reconnects with iTunes it should do a sync.
When the sync is doen, the upgrade is done.
Now, at what point did things not go this way.