Currently Being ModeratedDec 9, 2013 6:58 AM (in response to Triene)
The first step when you upgrade using iTunes is a backup. If you upgrade using iTunes immediately after the update finishes you are given the choice to restore that backup. If you restore it iTunes will then automatically sync your music, videos and apps (which are not part of the backup) back to your phone.
If you upgrade on the phone it will usually not cause any data loss, as it is just a patch to iOS, but if something goes wrong (e.g., lost Internet connection during the update) you may have to restore from a backup, so its a good idea to have backups on both your computer and iCloud.