sed '/item1/s/value=[^ ]*/value=whatever/g' <inputfile>
The '/item1/' means to only do the following command on lines that contain the string "item1" (it's an address in sed terms).
's' is a search & replace command.
/value=[^ ]*/ will match 'value=' followed by non-whitespace characters.
/value=whatever/g will globally (all occurrences, not just the first) replace it with value=whatever.
The g (global) flag isn't necessary if there's only one value=something per line.
Sed's man page sucks. So does it's info page. It took me a while to find a good thorough tutorial, but here's the link if you're interested:
I hope that helps.