I, too, did not have the sync option in settings for Picasa. However, I very quickly was able to do a factory reset which immeidately corrected the problem. also, a chance to redesign my seven screens. Did not take more than 30 minutes and I lost nothing that wasn't immediately available except old instant messages.
What about free apps (I know paid apps are tied to your google account)? Do they stay?
Those can easily be re-downloaded from the market, but the market doesn't keep a record of them. If you're going to do a factory reset, I recommend that you make a list of at least the most important ones to you.
I took the OTA and my picasa albums synced up fairly quick. Not sure if ota vs. manual means anything in this case, but maybe it does...Also, not sure if the fact that I had picasa sync while running Bugless Beast has anything to do with it either...