First of all: before you upgrade, always make a backup of your device in iTunes!
The following happens when upgrading to iOS 5 (this is different from previous system upgrades!):
The installer creates automatically a restore file
Then a clean system is installed on your device, all your data will be removed. Don't panic, this will be ok later on.
When the os is updated you get a few configuration questions (i.e. language settings).
At one point you're given a choice:
- configure device as a new device
- restore from iCloud
- restore from iTunes
Unless you want to start all over, choose the third option.
All your settings will be restored at first and your device will restart.
Now comes the tricky bit: After restart your device will work fine as if the process is finished. i.e. you can send and recieve mails. At this point you will not see the apps you had installed, also you're photo's and movies will not be on your device. (I was fooled buy this one at first too)
Do not disconnect your device or quit iTunes! In the background iTunes is still restoring the rest of your data. (Switch to iTunes and you'll see the progress.) This can take some time, depending on how much apps you had installed. One by one you'll see apps appearing on your device. You can't use the untill the whole restore is finished.
When all apps are back, your photo's and video's will be restored.
So please be patient. It took me more than an hour to get everything back in place.
The only small annoyance: there are new Apple-apps added to the homescreen. They're 'pushed' to the second screen by your own homescreen apps, leaving your second screen almost empty. Now you only have to rearrange the apps on the second screen.
If all turns out bad, because you unplugged your device too early, go back to your restore file you made yourself before upgrade. (You did do that, didn't you?) and start the process all over.