The most surprising result...
So I chose the "restore" method (option-cmd restore) to upgrade to iOS 5beta. As expected, it installed fine, but to factory defaults. After a new iOS 5 setup screen it gave me the option to restore from backup, which I chose, just to confirm if there was an escape route left.
To somewhat of a surprise, it offered up my old phone's name as a restore option, and I chose it. It went through a long process and I expected my old iOS 4 phone to come back. But, it was still iOS 5. And the most surprising result was... It also had my old data (well, it remembered which apps to install, but had to reinstall them, and my desktop asked for my MobileMe Keychain approval for iTunes for the phone).
And the second most surprising result is... it's reinstalling the old apps (in their proper folders and arrangements, it appears) - in the background!?! I guess it's not actually over-the-air at this point, but it almost feels like it, as I can open the phone. It's a bit sluggish though, so I'll wait for the installs to finish and see if it's really the best result possible (iOS 5 beta with my old data... even rhymes).
Bryan