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That sucks. I always export mine to my SIM as an extra precaution. I'd recommend doing that...right from the phonebook, menu options, export. You can put them on the SIM or SD.
Great stuff. Updated up to 2.1 and backed up all my contacts beforehand and only to lose 90% of them when running 2.1!!!!!
This phone has a been a fecking nightmare from day one!!!!! Sony Ericsson hang your heads in shame!!!!
SE released a new backup and restore app (in advance of the OS update) last month. It actually backs up your data and apps AND IT WORKS. Too bad they never told anyone.