DO NOT UPDATE TO 1.2 KEEP ON VERSION 1.1 UNTIL THE SERVER IS UPDATED!
When the server is updated to 1.2, which will be somewhere from a week to a month, depending on how quickly bukkit gets updated as well as all the necessary plugins, the server will be restarted to remake all the worlds so they are in the new file system and have the new animals and biomes. Sorry for anything you lose, but there really isn't any other way around it.