This is just a warning. If you haven’t downloaded the Kindle update for iOS (Version 3.6.1), don’t do it. It will delete your library from that device.
Amazon has acknowledged the issue, and is working on a fix. For now, just don’t update unless you want to redownload your entire library, which isn’t horrible, especially over wifi. It’s just a bit of a pain when it’s something you shouldn’t have to do.
Let’s hope Amazon comes up with a fix soon. We’re sure someone over there got yelled at today.