One of the reasons to be wary of SD card support. I've read about this happening on other phones in the forums (mostly Samsung). I would have thought the card would remain untouched during the update process, so I'm not sure how it could get corrupted (unless it has to do with how the system tries to access the card after the update).
No big deal. This is a backup phone that my daughter is currently using as a wi-fi only device. She lost some animation projects on Flip-a-Clip, but the final video files of those animations were saved to Internal Storage.