Depending on how big the restore is it can take several hours for the whole process. First time round I disconnected as I didnt think anything was happening and then noticed things were missing. When i connected again it asked me to continue restore. I let it continue and at the end everything is exactly as it should be.
Dont delete a backup. But also dont use sync. Providing you made a backup right before the ios5 upgrade (always essential) then that is the one that should be automatically, or maybe in your case manually, restored. For manual restore, connect the ithing, when it is detected by itunes, right click on the ithing icon and select restore from backup. There may be several backups so choose the most recent one.
Your problem that you loose everything since the last sync is expected.
Good luck
Oct 15, 11 15:19