Experienced by me and reported in the forums by a couple others.
When deleting a user thru the Site Admin, this removes all their content. This should only happen when removing their blog. In my case, the user did not have a blog, but had posting access to sub-blogs on the system. So for something like a blog network that would have multiple authors who come and go, you'd want their posts to stick around.
Seems the confirmation to re-assign their posts is gone. Or should they be moved off the sub-blog first, and then deleted thru site admin?