Just out of curiosity: if in Appearance -> Header you can see your custom image, what happens if you save changes?
(Same thing with custom background.)
As far as I know, updating TwentyTen (which happens when updating WordPress to 3.1) should not overwrite your Header/Background customizations.
In Appearance -> Header my custom banner still appears as it should ( same for background) saving changes and then going to the page to view results in the default Twentyten page.at the site- I also refreshed the page several times to be sure.
I can confirm that the default path.jpg header image is currently appearing on the site. Do you know if your web hosts are operating any form of cache?
I don’t – its godaddy.com
Should I call them?
You can certainly ask them.
What happens if you change the header, and then save settings?
Talking to the tech at Godaddy.
WP was originally installed into a /wordpress subdirectory in the root structure. We did not realize that we should have installed directly in the root. A tech later copied it to the root directory. It appears the upgrade of WP to 3.1 is updating the files and folders in the /wordpress directory, not the files and folders in the root, In essence it looks like I have 2 installs of WP and it is confusing things- working with Godaddy to try to figure it out and hopefully streamline it into the 1 install that it should have been.