After some serious digging around inside the iPhoto Library file, I have come to some conclusions...
*** Fair warning - don't mess around with your iPhoto library file unless you know what you are doing and have a good backup!
For reference, my iPhoto library is about 49GB with about 9,000 photos.
In my case, the sync problem came from an issue with the AlbumData.xml file. This is a big (11.6MB!) text file with information on all of your events, albums, etc.
If you remove this file, iPhoto will recreate it - it is generated from other information in your library. The file is used to share information about your iPhoto Library with other iLife applications.
Removing this file allowed me to sync photos, and select events in iTunes.
Relaunching iPhoto recreated the file - and blocks the sync again. obviously something is up with this file for me.
Since the file is recreated in iPhoto all the time, you can't really fix anything by editing the file. You need to find out what is causing the (unknown problem) to begin with.
Like alot of you, I have had iPhoto for a long time, and my library has been upgraded many times. I think this leaves alot of junk in the library that never seems to get cleaned up.
I actually created an empty iPhoto library for comparison, and I could see right away lots of aliases and empty directories that didn't look like they were necessary (note I have no way to prove this...).
I decided to clean up my albums (including Facebook albums) that I was no longer using in order to try to simplify things.
I deleted a bunch of albums that were synced to Facebook (just deleted them in iPhoto), and eliminated a group of folders where I had old albums.
This seemed to reduce my AlbumData.xml file a little, but it was still an 11MB text file - too big for me to verify by hand, so I kept on cleaning things up.
I also deleted some orphaned directories in the iPhoto library that were not in the Empty Library I created as a reference (again - these just appeared to me that they weren't needed).
I also went through and launched iPhoto with the OPTION-CMD keys down and selected each of the rebuild options one at a time. Each time you need to quit and relaunch after it finishes. Rebuilding the thumbnails took me almost half an hour.
When i was done, iPhoto launched OK, and all of my events, and the few albums I had left were OK. I had one album that was kind of weird, so I deleted that one and then everything looked fine.
iTunes could sync, and everything seems OK.
My conclusion is that something in the iPhoto 9.4 update didn't convert my library properly, either due to of the old junk in the library, or from some other type of "minor" corruption.
It will be interesting to see if anything comes from this issue. Originally I thought everyone must be having this problem, but now I am not so sure. There doesn't seem to be enough outrage in the forums - only a few people complaining about it. Maybe some of us just had some weird junk in our libraries and that is what caused this issue...
Anyway, if you get tired of waiting for Apple to fix this, you can always try some of these things.
At the minimum, you can remove the AlbumData.xml file in the iPhoto library and sync some photos on your new iPhone 5. next time you launch iPhoto it will recreate the file and you will not be able to sync again, but at least you can get some photos updated...
*** Again - YMMV, but this is what worked for me, and do NOT mess around with your iPhoto Library without having a backup...
