There seem to be various ways to get up the ***t creek with an Iphone+Itunes.
When you do a firmware upgrade, Itunes supposedly does a backup/restore - as you would expect.
Unfortunately the way it works is not what you might expect. The Backup function which you see when you right-click on the device's name in Itunes, doesn't actually do a backup of the phone, in the conventional sense. It merely does a sync with media etc stored on the PC; for example mp3 files are supposed to live under My Music. For Iphone users who don't use the My Documents directory hierarchy in the "approved" manner, this is a big gotcha because it is easy to lose stuff from the phone.
I have found hundreds of old IE7 bookmarks copied to the phone after connecting it to Itunes. I do not use IE7 but have it installed. Somehow Itunes decided to sync the two...
I also cannot see any backups listed in Itunes (under Preferences / Device) despite having done a number of them.
I can see this is a well dumbed down system which works for most people, but.....
Not sure if I will be upgrading to 4.2 firmware (despite it supposedly supporting printing, which would be useful) because I don't want to reconfig the whole damn thing.