Same issue. Synched fine yesterday with 7.0.2, and been synching fine since 7
Updated to 7.0.3 and iTunes 11.1.2.31.
Put new songs in my library on iTunes, click sync, does a 'sync', check phone, songs not there.
Delete songs from iTunes library, click sync, does a 'sync', songs still on iPhone.
Untick Sync Music in iTunes, click sync, iPhone free space indicator goes from 9Gb to 12 Gb, sync completes, iPhone free space indicator goes from 12Gb back to 9Gb, check phone and all music is there..
With this update i cannot sync AT ALL. Nothing that i do in iTunes is reflected on the phone. It just ignores it completely.
It's ludicrous this was allowed to come out in this state.
And "Smart" Playlists are probably still broken i bet.