It's a foregone conclusion that Apple will be fixing this with 2.01 / 7.8. For one thing there is *no need* to back up the actual apps themselves since the iTunes App Store keeps up with which apps you've already downloaded and will let you download them again at no charge at any time. The only information that iTunes should therefore be backing up is user created data unique to the app. The SDK already provides guidelines as to where the apps should be placing this data. Apple just needs to trust the developers to follow the already established guidelines.
That Apps are so tiny it hardly matters -- might as well back them along with their data. The problem is the fact that the backup itself is clearly a bug factory. It should be 100x faster for the amount of data actually being backed up. iTunes 7.8 (& 2.0.1) can't come soon enough.
Yeah ... iTunes was just updated to 7.7.1.11 as well.
The combination of the iTunes update and the iPhone update has (as expected) smoothed out both the sync problems and the performance issues.
I also received a bunch of free App Updates today. All of the apps that occasionally crashed (the VisuaRadio app was the biggest offender) now seem stable.
With MobileMe now stabilized as well, it appears as though Apple finally has a handle on the platform. Considering the current limited availability of the 3G, I wonder if Apple now wishes they had just waited until August to launch? Everybody would probably have had a smoother experience if they had.