Thanks for the words of sympathy, y'all.
Hind sight makes us wiser, so here's what I have learned -- maybe it's useful for you.
- it is important to back up -- frequently and to multiple devices that are not kept together. In my case, I used unison to sync the important stuff with my laptop, but the laptop was swiped along with the Z. I also backed up to a 2GB flash drive that went with everything else. I know it is stupid to keep everything together, but you may be like me and not always plan to be robbed at any time.
- don't store sensitive info on the Z. I used Zsafe to store *all* my passwords, now I am wonder how safe it really is. I also had bank account info, pdfs of my tax returns and passport, and many other documents. It bothers me that a thief now has access to all that. It's clear to me now that an encrypted file system is critical for portable devices.
As to how it happened, it happened inside a train from Prague from Vienna. Stupid me decided the train would be a good way to go (mistake #1). The Holesovice station in Prague is nasty, right out of a movie. Then I accepted help with the luggage from a porter (big mistake #2). I kept my laptop bag with me at all times until we got on the train. I put it on the seat so that I could help the porter thief with the big luggages (huge mistake #3). The porter worked with a colleague who swiped the bag. I only noticed it was missing when the train was moving out. The best part is that I paid the thief $10!