Wow! really my Mac screwed me over?

Ok so I have the iphone 3GS, at the time I was running on the Original operating system that it was sold with, I eventually found a app I wanted called Ocarina, that needed the newest version software update. I have had no prior updating experience whatsoever, I clicked update, and it told me I need to back up my information, so I went to the sync button on transferred all of my content onto my computer, then additionally it told me again that I needed to transfer the content over again which I did, then to be sure I clicked the sync button again and nothing happened, just to make sure all of my content, phone number, music, apps, all transferred over to the computer. As I clicked update It began to update and said it was going to back my files up by transferring my files from my Iphone to the computer. After the update finished I installed the game, there were many problems with the update, for example, the speaker would not work for any of my music nor pandora, the volume indicator told me there was no volume input, also my phone was popping a message that said unsupported device even though I had not device plugged in, the phone would not operate efficiently, after finally getting tired of all my function spazzing I decided to restore to the default setting because the problem kept on persisting. I again backed up my files and restored my setting to my computer. When I went back to sync my setting back to my phone, most of my information was gone, all that was left was my apps that I payed for. All of my paid music and contacts have vanished. I am not understanding why It told me to backup the files, as I did, and come back and the files were not even saved. I spent an hour or so just waiting for the transfer to finish. I am a little frustrated I had some important information on some of the files that I needed and my computer told me it was there so it seemed. I would love some information on some fellow owners of people who may know about this or whom have experienced this.