After many failed attempts at the normal upgrade method, I decided to jump in at the deep end and do it manually.
I downloaded the ipsw file, put my iPad in DFU mode and manually upgraded to IOS 5. After the installation, Itunes restored my last backup and now it is back exactly the way it was, except on IOS 5. The whole process took less than 30 minutes.
Thanks to all the knowledgable people on this forum, it was a painless and quick process. Without all your shared wisdom, I probably would have given up by now. Thanks again.