I have this issue with a Dell Optiplex 380 running Windows7 SP1. BIOS updated to A07. Latest Dell drivers installed, Intel chipset update utility run.
USB1 devices work fine in all ports (mouse, keyboard, webcam, unpowered hub), USB2 devices (memory sticks, external HD) give a 'USB Device not recognized' message and install as Unknown devices.
If after plugging in a USB stick I go into Device Manager, go to View > Devices by Connection and open the tree down to Intel(R) N10/ICH7 Family USB2 Enhanced Host Controller - 27CC > USB Hub > Unknown device, then uninstall the USB Hub, I immediately get a popup saying 'This device can perform faster if connected to a USB2 port'. I can then access the stick contents normally. I can also use any other USB stick or HD in any other USB port
This only works until the computer is shut down, on a restart Windows detects USB Root Hubs and installs Device Drivers, and I'm back to the USB Device not recognised scenario again, when plugging in a USB stick.
Disabling the USB2 Enhanced Host Controller results in USB memory sticks and HDs working - except that I get the 'This device can perform faster...' popup.
Suggestions on how to fix this would be very welcome!