Why does a new OS mean I lose all my stuff?

I just updated my iOS on my iPhone 3gs to the latest version. All media = gone. All apps/folders/settings=gone. All ringtones=gone.

Why is it that an OS update forgets all my settings?

Am I the only one?

The update cycle should do the following: Backup your phone, reset to factory settings, upgrade, and restore your settings.

This worked perfect for me. All I had to do by hand was syncing all my Apps again. Email settings and such was all the same as before...

Me too... the routine should have restored your stuff back on your device.