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I've just upgraded my iOS 4.3 to iOS 5.
It nicely backed everything up over WiFi and via the cable and all my apps were back on the phone in the same folders (albeit it with a few extras).
But there was one huge problem - none of my other content would sync.
On the iTunes bar it showed as if everything was ok and ready to by synced, but when I pressed SYNC - nothing happened.
The iPhone Music screen is just empy with nothing on it.
Admittedly, some of my music is not straight from iTunes, but a lot was actually purchased on iTunes, along with podcasts and audiobooks and none of them would sync. So it wasn't the problem with iTunes/non-iTunes downloads.
I then tried restarting the phone. Didn't help.
I restatred iTunes. Didn't help.
I restarted my computer. Didn't help.
I tried restoring the phone to an earlier iOS 5 backup - didn't help.
After a couple of hours of fiddling with this "incredible" piece of technology I decided to restore my iPhone to its latest pre-iOS backup. When you click on RESTORE, you are given an option of the backup to be used. If you have something pre-iOS 5 - choose this one. It won't necessarily go back to iOS 4.X, but it will restore the entire system and magically, at least for me, it would get you music and other contents back on your favourite device.
Let us know if you are still having trouble and best of luck!