Congratulations on returning to where you were. I just hope another update doesn't come along and reset you again. :)
I would be heartbroken if I were reset to level 1. I've put in a lot of time, effort and actual $$ buying items for my town. If I were reset, I would raise a fuss because I certainly shouldn't have to repurchase all of those items (especially the premium ones). Plus, it would be very sad to lose out on all limited time items, like Fat Tony, the Fancy Brown House, some Halloween and Christmas items (and now Valentine's).
I hope your situation is rare and not the norm. If so, it begs the question - why can't we also back up our game to our computers? This way, if there is a crash of some sort on EA's servers, our games are still secure elsewhere.