I actually did do a sync before applying 1.1.1 - just in case I had a problem. I didn't realize that the photos on the iPhone didn't sync/get backed up during the process. Sure enough the firmware installation failed initially (no idea why since I never had 3rd party apps on the device). On the next connection, iTunes did a restore. It restored nearly everything *except* photos, my YouTube bookmarks, and my wifi settings.
I lost a handful of photos including a number of rainbow photos (I see them in my area once every few years, so that really stinks!).
😡
--DotComCTO