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We upgraded the characters at the fairy in Skylanders for the xbox. When we logged back in, under the right profile, all saves were gone.

has this happened anyone else?

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I don't think the issue is with the character upgrades, I've seen some people have issues with the game saves on the xbox 360, see the question here gaming.stackexchange.com/questions/44040/… –  JohnoBoy Jan 12 '12 at 20:01
    
I had all my Skylanders game saves disappear also on the XBOX 360. I started the game with the portal not plugged in. Maybe that did it. –  user18323 Jan 15 '12 at 1:16

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