vista system restore overwrites personal files

Recently a windows update stopped my usb keyboard and mouse from working
after bootup and required me to reinsert then everytime I restarted my
laptop. I decided that the easiest course of action was to do a system
restore.

After restoring I was dismayed to see that a folder c:/my documents/folder
name had most of it's previous files removed.

An additional folder was present c:/my documents/folder name (679) which
now contained the remaining files.

God knows what else vista system restore changed that I haven't noticed.

I restarted system restore to undo the restore however windows had decided
to do an update (even though I have set it to notify me but not install
updates) and the undo restore point was no longer available.

I should point out that this is a brand new laptop with only windows office
2003 installed - ie a pretty clean system.

I'd suggest vista system restore cannot be relied upon.