Strange. It shouldn't format the hard drive unless you put the big tarball alongside updater.sh and zimage.bin.
Just the updater.sh and the zImage.bin (= kernel) won't do anything special to the disk, iirc. (But others plz point it out if i am wrong)
Correcting myself: the titchy updater.sh does reformat the driver automatically, which is not supposed to do so (at least it should ask first for confirmation) ...
My Z is still dist-upgrading. Will try flashing 2.6.22 and see if it will bring me any surprise.