I'm having the same problem. Running a Core2 Duo iMac w/10.4.10 and all the latest updates (also tried Safari 2 and 3). I have my Safari bookmarks syncing successfully across multiple Macs (the iMac, a MacBook and Mac Mini) via .Mac: all with no problems. Address book and Calendar sync fine both directions.
The initial sync when I set up my iPhone brought my Safari bookmarks over to the iPhone. BUT, after that, any updates on my Mac, or on the iPhone won't appear on the other. Tried turning off "Sync Safari Bookmarks" in iTunes and back on. Tried "Replace info on this iPhone" with Bookmarks checked. Didn't work. No error message...it just didn't update/remove my iPhone bookmarks.
Would love to see this one fixed. Makes browsing on the iPhone tough w/out my bookmarks. I have a lot of them, and it's easier to select one than enter a long URL by hand.