There have been scattered reports of this problem, but it is by no means the expected behavior: upgrades should always preserve all of your books. We believe that the problem is due to iPhone's upgrade process, whereby if something goes wrong (such as a corrupt download that it needs to re-try), then the iPhone handles it by deleting the application first, and then installing from scratch. Unfortunately, when an application is deleted from the iPhone, all of its data is deleted as well, which, in the case of Stanza, includes all of the books. However, if you have synchronized the iPhone/iPod with iTunes before you installed the update, you can restore the books from the backup by following the directions at http://www.lexcycle.com/faq/restoring_from_backup.