Upgrade failed, now iPhone (3gs) in restore mode - help!

Please help!
After syncing my iPhone (3GS) I tried to install new software. Backup went ok, however software upgrade failed, now iTunes states my iPhone is in recovery mode and needs to be restored. this happened last time i tried to upgrade software (before 4.0) and after restore I lost all contacts, photos etc. What actually happens during backup - one would assume that all the data goes somewhere so that you have a 'backup'????
Yours hopefully
Lindsey :0(

Hi...there IS a backup available to you. If you have "dropped" everything, by for example, pressing the Reset all to factory settings, then everything is gone.....but it is on your friendly computer under iTunes! Highlight your phone in the left column and in iTunes, when it shows your phone data, click on the CTRL and mouse click.....this gives you a pop up window, that gives you the chance to revert to the saved info and woohoo....it will all be back in the phone afterwards!

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