Hmmm, odd that it would delete the lot.
But yes probably a hell of a lot easier to just put your music on a memory stick, you can have album art as well.
My memory stick is very small in size so doesn't stick out too far (about 5mm). It seems there is some discussion regarding the max capacity for the USB in the centre console. I'm currently running a 16gb, but it seems most say 32gb is the max (I've only got 16 simply because that's what I bought).