He has a link to a forum for the fix for Windows users.
mwoodman comes up with a solution that works for him.
2. The “Audiobooks” Library category has been replaced with “Books” in iTunes 9.2. Properly imported + typed audiobooks will now show up there.
3. Download the iBooks App for your iPhone/iPod Touch
4. Sync your device and select the new “Books” tab. This is actually a very tall page, so it’s easy to miss that it has an area for Audio Books at the bottom. Just scroll down and it will come into view. You can then check the “Sync Audiobooks” checkbox and a whole new section of the page will appear.
Other people found that doing a restore as new solved the issue for them.
iPhone 3GS vs. iPhone 4 comparison in an info graph.
via The Apple Farm
Apple offering refunds, upgrades to recent iPhone 3GS buyers – AfterDawn. This is pretty generous.
It chipped a little bit but the poster still enjoyed it.