So here is the fix to disappearing iPhone music bug, just follow these steps:
- Connect your iPhone and start iTunes
- The phone appears under devices in the left-hand column; click the arrow to the left of it so your media categories appear and select music.
- Play a song on the iPhone via iTunes on your computer.
- Sync the iPhone again
- • Re-open the iPod app on the iPhone
Via: iPhone music gone after iOS 4.2.1 update