New developments!
I have found that the culprit, at least for me, seems to be the "live updating" option of the smart playlist. Previous iPods have not supported this feature, and it looks like Apple attempted to support it on the iPhone. What this means is that the playlist is supposed to be dynamically updated as the play count of your songs changes.
With this enabled, the songs are copied correctly to the iPhone but it reverses the desired effect. "Most played" on the iPhone becomes "least played." I haven't had time to test this across the board, but it does seem to be the problem in this instance.
All I can suggest is that you see if this is a workaround for your specific smart playlist problem, and to keep pestering Apple support about the problem! The 1.0.1 software update does NOT address this issue.