No. Under normal circumstances with a properly synced iPhone updating the firmware will not lose any contacts. All information including contacts, calendars, apps and music are stored in iPhone backups or your iTunes library and are not affected by iOS firmware updates.
BGR already has its hands on a copy of the upcoming iOS 4.3.2 firmware update for iPhone and iPad. According to their sources the update will be released before the end of April, possibly even next week. Several fixes and changes are expected in this minor update.
For one, the 4.3.2 update should address the strange FaceTime issues that iPhone 4 and iPad 2 users have been experiencing lately. These include video freezing, having to restart the iPad, and the iPhone 4 leaving behind random photos of users on the screen. iOS 4.3.2 will not presumably be available on the Verizon iPhone 4, which is still running 4.2.6 firmware.
The latest firmware from Apple is already here. Just over two weeks after the release of iOS 4.3 for GSM iPhones, Apple has added bug fixes and other minor updates to iOS 4.3.1. The update was made available on iTunes earlier than expected. Verizon iPhones (CDMA) will remain at iOS 4.2.6 for the time being.
This update is also designed for the iPad, iPad 2 and fourth generation iPod touch. Although the update is relatively minor, if you are one of the users affected by issues addressed in the update you'll want to install the new firmware right away.
Some iPhone owners who jumped to install the iOS 4.2 firmware update yesterday were greeted with an unwelcome surprise. Media including music, audio books, podcasts and videos disappear after the update is complete. iTunes still displays the storage space occupied by the media files, but they are nowhere to be found on the iPhone.
Opening the iPod app simply says "No Content" and re-syncing with iTunes does not bring back the media library! Apparently something was overlooked by Apple, but lucky for iPhone owners the bug fix is quick and easy. Your music files are hidden but still stored on the device. Don't restore your iPhone or take drastic measures, just follow these simple steps:
Apple officially released the iOS 4.2 update today at 10AM PST. iPhone 4 owners get a special surprise in the latest operating system, free Find My iPhone service. The feature makes it possible to locate your lost iPhone using maps on the web. Previously the service required a paid MobileMe subscription to use.
iPhone 3G owners are anticipating significant increases in speed and performance with the latest fixes and optimizations included in iOS 4.2. This version of iOS is the first to run across all recent iOS devices and will hit the iPad and iPod touch today as well. Several new features will come to the iPhone.