I have about 9 websites that I have designed in WP in the last 5 years, so while I am not some big time WP developer, I do know the basics and how to work in WP.
My MO is to setup an account (I use BlueHost.com) with WP installed. Then I have them create a temp url so I can work on the site before porting the dns servers over since most of my work is on websites that already exist and don't want the site I am working on to be seen until it is ready...
Ok, so that is my background. Now, what I did, which is what I always do, is take a free template from out on the web, install it in WP, then begin to change that so I don't have to start from scratch. This is what I did for this client and I used the Twenty Ten template. I do things like change the colors/fonts/size and hide other things that the client doesn't want. In this case, I also added some rotating images that lived in a folder I created in the images directory that WP uses when you upload files. Then I adde a php rotate file in the same folder as the images and added the call in the header.php file so the images will rotate for each refresh, pretty basic stuff.
So, last night I saw when I was in the Dashboard of this project that WP 3.0.2 was out and asked me to update, so, as I always do, I hit the update and watched it go through its motions. I NEVER for a sec worried about the Twenty Ten template becasue I was not updating it... but when I went and refreshed my preview page of the site I was working on, blam, all the stuff I had added was gone, back to the default including missing pics from the banner.
So, my confusion here is that I always do the WP update and have NEVER, NEVER had that update do anything to the template I was using or any of the code changes I have made, never once.
If someone can explain how this could be, I am all ears.