iTunes is supposed to make a backup of your iPhone settings and data every time you sync, but I’ve already been burned twice by their crappy software.
First time I tried restoring my phone to fix a problem with no sound coming out of the earpiece. It didn’t help (plugging and unplugging the headphones several times did), but I found out that they don’t backup and restore the photos you take on your iPhone. Idiots.
Second time I decided to restore my phone before installing the 1.1.1 update, just to be on the safe side. This time, it started restoring the iPhone while the activation process still seemed to be underway. A few minutes later I get an error message on my computer that there was a problem restoring from backup because their was a timeout. No option to try again. I went ahead and tried syncing my phone. It updated bookmarks and contacts, because those were synced with desktop applications, but my e-mail account settings, my favorite contacts, my calendar, all my notes and pretty much every other setting was gone. I was going to try restoring the phone again, but iTunes only keeps one backup, and from the associated times on the backup, it had gone ahead and created a new backup from my iPhone after all the data went missing.
WTF, Apple? I thought your stuff was supposed to just work.
Maybe you should open the iPhone up to 3rd party developers, because you aren’t doing a very good job on your own.
Update: This post is old. iPhone backups are much better now.