I'm another happy camper using this theme since 2009. I have other premium themes to use. I did the upgrade and the images were wiped out and now I have to reload them. For a couple of reasons the images are not going to be easily replaced. Is there a reason why you offer an update that removes files and configurations related to customization? It is illogical, and creates a reason to use another theme. Is this a goal?

The update process is what WordPress does and theme developers have no control. You might want to read this thread in the FAQ forum: HOWTO: upgrade Atahualpa to a new version