I don't think the update warns about backing up the iPhone's content first or at least making sure anything waiting to be synced with iCloud has finished first.
My work colleague recently connected her iPhone 5 to sync a ringtone through iTunes and it asked her whether to upgrade to iOS 8, so she went ahead. About 20 minutes into the update, it threw up a message saying an unknown error had occurred and the phone just displayed a image showing to plug in the USB and run iTunes.
When she unplugged and reconnected her phone, it then threw up another message saying that her phone is in recovery mode and that it must do a factory reset and erase the iPhone to proceed. Clicking 'Cancel' did nothing other than dismiss the message and leave the phone stuck with that connect USB and run iTunes image.
It sure looked quite scary and she was starting to panic about losing all her photos, contacts, etc., particularly when it went through the initial set up process of choosing a language, enter Wi-Fi password, etc. But luckily she did use the iCloud and it gave her the option of restoring the data. She did have to reinstall her apps and also lost certain data such as all her previous Viber App messages.
So for anyone planning on installing iOS8, back up any important data first!