I believe this problem is related to the option in iTunes "Sync with this iPhone over Wi-Fi."
I recently had this issue and was able to resolve it in two ways:
1. If you have the option to sync with this iPhone over Wi-Fi checked in iTunes, then unplug the cord to your computer and sync via Wi-Fi only. Go into your iPhones settings (General | iTunes Wi-Fi Sync) and initiate the sync from the phone and not the computer. Your computer should be on with iTunes open. You will see iTunes push your updates up to the phone.
If for some reason the button is disabled on your phone, some people had to disable and enable the option in iTunes and had to restart iTunes with each change. You may want to reboot your phone as well.
2. The other way I resolved it was to disable this option to sync over Wi-Fi in iTunes. After disabling this option, I restarted iTunes and then plug in my cord to the computer. I then initiated the sync from my computer and not the phone.
Ever since this new upgrade, there have been all sorts of issues with the Cloud and syncing over Wi-Fi. You have to stick with one option and not mix things about. I hope that helps.
I'm using:
WinXP SP3
iTunes 10.5.2.11
iPhone 4 iOS 5.0.1