Preserving iPhone apps during iOS5 update

I want to get iOS5 for my iPhone 4. When I use iTunes to update , I get the following message:
Updating to iOS 5.0 will delete all of the apps on your iPhone. To preserve your apps, apply this update on the computer where you sync them.
How do I apply the update to the computet?

I transfered the purchases to iTunes and backed up my wife's iPhone 4, did the iOS 5 update, restored from the backup, and everything went smoothly.
I followed the same procedure with my iPhone 3Gs and lost ALL saved data of value.  It appears the various techniques to roll back to iOS 4 don't work, and the restore isn't working with moving the 3Gs data to my new iPhone 4s.
So at my location, we had a 50% failure rate with the update.  The new features for an iPhone 4 are essentially fluff, so I won't risk your data if you have something you want to save until the next service release of iOS 5.  If you don't care about any special app data, photos, videos, messages, etc and have the time to re-sort everything back into folders, then go for it.

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