I had a defect Kindle as well. I don't know what went wrong with it, but I had a lot of books on it. I de-registred my defect Kindle this morning, just before I got the new one, so I don't have any old collections left.
As I don't know what was the matter with my defect Kindle; I'm starting from scratch, also making new collections. I want to be sure I'm not corrupting anything by bringing some things of the backup of my defect Kindle into the replacement I got this morning.
That's just my idea about it.