When Apple first announced that third-party applications would be coming to the iPhone, they also announced an update mechanism in the App Store. On the surface, this ability to update applications (mostly for free) is a nice feature, however, when you learn that Apple didn't include a means for developers to save the data files created by their apps, you tend to start rethinking "nice feature."
I first noticed this when I updated Enigmo and lost all of my saved games. In addition, I just updated Facebook and lost my login information. Apple should have provided a way for applications to save information like this for retrieval after an update.
Have you encountered data loss in after updating your iPhone's third-party applications? Be sure to sound off in the comments.
Update: Judging from the comments to this entry this appears to happen on a case by case basis: sometimes updating an app will overwrite your data, other times it won't. Sure sounds like a bug to us! Though the question is: whose bug is it: Apple's or the 3rd party app dev's?