Recovering apps is no problem, esp paid apps. You realize by now that the 2.1 update will completely wipe your phone clean. After your update, you will go through the process of setting up your email accts, re-syncing your calendar and contacts and so on. Whether or not you use Gmail, you will need to log back into Google services with the SAME Google acct used when you set your phone up originally. The Android App Market is dependent on your Google login.
After you set up all your accts, go into the Android App Market (notice it's shiny new UI!) and click the Downloads tab. Voila! All your previously downloaded apps are there for you to select and re-install. Paid apps will download again too, no need to re-pay for them since the payment is tied to your Google acct. Start selecting all your previously installed apps and re-install them. You may need to select a few at a time and wait for them to download/install before selecting more. DON'T EXIT THE MARKET UNTIL YOU'VE GOT THEM ALL.
ONE GOTCHA TO BE AWARE OF:
The FIRST TIME you open Android App Market (after providing your Google creds) you will see a history of all your previous downloads in the Downloads tab. IF YOU EXIT Android App Market and have not installed ALL previously installed apps, and then return to App Market/Downloads, you will only see what you've installed. No more history. I think this is a bug and wish Android/Google would fix it.
You can still install any/all of your previously installed apps on your new load. However, if you exited App Market before you installed all your previous apps, you'll just have to go search for them in the market place.
Personally: I use Astro File Explorer and back up all my apps to my SD card. Then the only app you need to re-install on a fresh load is Astro. Once installed you can use it to re-install all apps from SD, no waiting to download.
Best of luck!
Sprint Product Ambassador and Sprint employee --
All opinions and views are my own. But I'm usually pretty funny and totally on point because I'm humorous and a smart guy, not just a pretty face.