You'll lose EVERYTHING. The paid apps will show up in your market (it's linked to your gmail account and you DID pay for the apps), but you'll have to reinstall them/set them back up.
Think of it as opening the box again and pulling your Droid X out -- only with a few scratches.
Yeah, sorry, forgot to say that. I'm a bit foggy from my meds so the occasional thing slips out.
As long as you have Sync turned on you wont' lost your contacts. If you back up your texts you can save them to the SD card and restore them after you update.