Unfortunately, it appears that my iPhone 3G (running version 2.1) is still getting corrupted when I sync from MM (3.0.6.1190). Please forgive the length of the post, but I'm going to try to describe the complete setup and circumstances in the hope I am missing something and can easily fix this (as I do not want to go back to iTunes)
In MM, I use "auto-sync". The auto-sync list consists of a single playlist and I have "Sync a random subset of selected Music and Playlists up to device capacity" checked. On Auto-sync options, "Delete Tracks that aren't on the Auto-Sync list from the device" is checked, with the Exclude Folder set to *.mp4. I also have "Confirm deletion" checked, and no confirmation dialog every popped up during synchronization. Auto conversion is on, set to down-convert all MP3s to 128 kbps. Device configuration is set to Sync tracks to <Artist> - <Title>.
After I connected the iPhone to MM, I selected the phone and deleted all existing music (I left all ringtones on the phone, as they showed up on the list as well). That seemed to succeed (very quickly). I then right-clicked on the phone and selected "Auto-Sync". That took a while and, when the sync was complete, the iPhone displayed a message that the phone was at capacity and I needed to delete photos or music to make room). When I select the iPhone in MM, I see a small number of files (1.9GB worth) and it shows 0 Bytes free.
iTunes is set up to manually sync music, syncing contacts and calendar wirelessly (from Apple's MobileMe service).
Once the sync is complete, the iPhone is showing no music (or any other media - there were videos on it when I began). When I hook it back up to iTunes, I get the dreaded "iTunes cannot read the contents of the iPhone...click Restore to restore this iPhone to factory settings."
At this point, I'm at a bit of a loss on what to do next. If there are any other details required, please let me know and I'll do my best. Thanks in advance for any help you can provide.

