I have the same problem except that now mine reads IPhone is disabled. I logged into Itunes on my computer but it did nothing to fix it.
The phone screen reads "iPhone is Disabled connect to iTunes" When I connect to the computer with my iTunes account, the computer says to respond on the phone. The phone still reads "iPhone is Disabled connect to iTunes". The touch pad on the phone was not functional. I got that repaired today and am waiting for my daughter to return home with the computer that has our iTunes account loaded on it.