I've upgraded my phone 3 times so far (3G -> 4 -> 4S -> 5) and no issues with migrating Google Authenticator settings. I do have the habit of wiping out all my music but that's because I never bothered to setup iTunes properly (plus my desktop is Linux so I run it in a Windows VM).
I'm not too worried about the restore not working as I have the single use codes securely saved as well (and tested). If I lost my phone or bricked it during an upgrade I can just use those to set things up again in ~15 minutes.
I consider that process superior to waiting to get a new phone. More importantly on a day to day basis (eg the normal case where you don't lose your phone) it's more secure as it can't be MITM without getting the TOTP secret either from my phone or from the system I'm authenticating against.