iBooks purchased from the iBook Store sync fine. Bedsides, you can always download them again.
PDF books are more trouble. In general, if you add a PDF book to iTunes and then sync then it will sync back to the iPad; however if you add the PDF book on the iPad, say by email or another app, then it does not sync back to iTunes. Even using Transfer Purchases will not copy them to iTunes.
Transfer Purchases usually works with ePubs usually work, but I've heard of them occasionally doing this as well.
Since books in the iBooks app are not part of the backup, if they never get into the iTunes library then you have no backup. Since you essentially wiped the iPad clean to update, there was nothing to restore.
Peled is right that iTunes will often decide that it's copies are the only copies. This is always true when you first turn on syncing. When that happens it will completely replace your iBooks library with what it has, erasing everything else. Actually, this is typical behavior of all media syncing. It just doesn't come into play with most other stuff because you can't add media to the iPod/Music, or Videos app except through the iTunes Store or iTunes on the computer.
So, if you choose to use iTunes to backup your books, always add them to iTunes, then sync back to the iPad. Or do as Peled said, and never turn on Book syncing at all. If you do that, make sure you have copies of the books elsewhere on your computer. If something is important, you should never have a mobile device as your only copy. Of course that's true with any computer, but more so with mobile.