Not only does our update and restore take over 6 hours. We can't even use custom backgrounds for the home screen! Looks like Folders is all we get.
During the "restore in progress" on my 3G, I noticed the new wallpaper pop up for a moment. Total B.S. Mine is currently restoring music, which will take a while. I made sure I performed a sync first and then a separate backup before I ran the update. The backup process during the update only took about 10 minutes for me.