Apple has posted a new Knowledge Base article about iPhone/iPod Touch backups that is definitely worth a read. The article describes when backups occur, the difference between syncing and backing up, and how to restore from backups. It also details the process for deleting unwanted backups:
"You can also use iTunes to create a backup of settings and certain other information on your iPhone or iPod touch to use in case you want to restore the software on your iPhone or iPod touch or transfer this information to a different device. Backup information includes information such as mail settings, text messages, notes, call history, contact favorites, sound settings, widget settings, certain network settings, and other preferences."