Well I’m in the middle of restoring my 16G iPhone 3G.

If your sync is interupted, say by disconnecting the cable or receiving a call, it’s possible for your ipod index file to be corrupted. What can happen then is that your entire library of media turns into “other” in the storage system.
There are a couple of fixes if you have a jailbroken iPhone, if you are running stock (as I am) there are significantly fewer. The “recommended” fix is to restore your phone through iTunes.

Things seem to be going so well so far and I’ll write further if there are complications.

Since the latest firmware updates, the restore and syncing process is significantly faster and less painful.

I’m hopeful there will be a fix in the next firmware release for this bug, it’s a little annoying.

Cheers,

Shane