I had to do a full restore of my iPhone to get the calendar to sync correctly after installing Leopard. I still have problems when I check the "Do not sync events older than XX days" box. Leaving it unchecked works fine.
Do calendar entries actually take up any significant amount of space? A backup of my iCal from more than the last 2 years for all of my personal and work calendar entries along with DVD and movie releases, sports games, holidays, birthdays, etc. is only 19 MB.
However, thanks to a tip on the Apple discussion forums I found the answer.
1. in iTunes>iPhone>Info Tab>Advanced: click Replace Information On This iPhone: Calendars
Next time you enter an event on the iPhone it should sync back to iCal.
The one obvious downside to this is that it will delete any entries you had entered directly on your iPhone that hadn't yet been synced to iCal. I only had 2 such events so it wasn't a big deal. If you have more this could be kind of a bummer. But after you do this the syncing issue should be resolved.