I think the problem was that a lot of games store savegames in the game folder and the game folder is under the Steam folder. So if that gets deleted it deletes savegames as well. If you're not used to backup saves yes, I agree that it's a problem.
The "xx game is unavailable" message pops from time to time, I always just assume that the servers are overloaded. I either try a few times or switch to another server. It works for me. But I see your point. Sometimes it's a bit of a hassle and not everybody wants to go through that.

Well it's more than hassle, if you don't know, you just get to the point where there's nothing you can do to fix it. Games have been avoiding deleting their savegames during uninstall for well over a decade now, I'm not sure how uninstalling Steam should be any different except they do things whatever way seems to "make sense" to them, come hell or high water.

Words can't express the amount of empathy I have you in that situation.
For me it was hell because I just went through that whole week of update limbo. Then I finally get into my account and I can't reload anything without waiting some more.UGH!

I did have a game saved in the "cloud" and that was uneffected. But for those who would prefer to not have to be connected in the first place....it is frustrating.

ouch

Just tested it. I killed the process, and I lost connection to UKCS (with L4D). It may be game dependent though, I was fine with playing HL2 EP2.

Also, sometimes when I lose connection with Steam, all my items and stuff for the game I'm playing disappear.

EDIT: Forgot to add the game.

Well, L4D is designed as a multiplayer game. So it's not all that surprising that it doesn't work without an internet connection. It's also a game that's only available through steam, so you can't really say if that's a problem with steam or a problem with L4D.

I tried it with a bunch of single-player non-valve games and encountered no problems.

Which games do you lose stuff in?

Team Fortress 2... All my found / earned weapons and hats disappear if the connection with Steam is lost.

It is probably dependent on the game in question.

Well for TF2, you can buy hats and stuff through steam, I'm guessing that's the reason.
Games using steam cloud would have trouble in offline mode because it can't synch down your savegames when you launch it and not.

As for losing savegames by uninstalling steam. That's a new one to me, as most games would store your saves in your windows user profile folder. In Vista/7 it shouldn't even be able to stuff the savegames in with steam unless you allow administrative rights whenever you launch Steam.

Though there's no messing around with DRM on stuff like the XBox I'm wary of getting too many games because of the track record of the things breaking.