To be honest, seeing how many people seem to be having issues with the latest firmware version, it might be a good idea to hold off updating for a while. Perhaps your initial issue can be solved without updating.
The deletion of books you experienced is a relatively well-documented issue; you may want to read the thread
here. At this stage it is not clear whether the latest update solves this issue, but this bug has been around for a while.
As for putting back the books on your Kindle, are you sure you copied your books to the kindle in a kindle-compatible format (e.g. AZW, KFX, MOBI)? If so, then perhaps your issue lies with your USB cable, or the storage on your Kindle could be faulty. That might explain why neither books nor update files show up on your device.