Updating the OS wipes the handheld and installs new firmware.
If the update is done correctly, it should sync, back up the phone and restore data at the end of the upgrade process.
If it did not, I would guess something went wrong with the process.
I have updated 3 (1 3GS, 1 3G and a iPod Touch 2nd Gen) devices to 3.0.1 and have had the data returned to all of them after the upgrade process.