Actually, I found just the opposite.
When you upgrade to iOS5, your apps are erased, but the data (which is supposed to be somewhat encapsulated within an individual apps storage bubble) is still left on the device. I knew this because at first, I didn't load my bank apps on my system - I waited about a week. After I loaded them on, my bank card numbers were already loaded into the sign-in form.
So not only is this a privacy issue, but I didn't reload all of the same apps back on my device, so there's still some unassociated data left on the device, and the only way to clean it up is to wipe the entire device completely and reload apps and data from PC. Why didn't Apple just require that users do this in the first place, since you have to reload your apps anyway? Instead, there's a couple of gigs of dataspace that's wasted on my device that I can't reclaim unless I know EXACTLY which apps I had installed prior to iOS5 (Apple doesn't keep a record of this), reload them all, then delete them one by one thus clearing up all the dataspace, and then reload the ones I really want again. Sorry, but this JUST DOES NOT WORK!
This device will be my last Apple iOS device before Windows 8 comes out on tablet devices.