iCloud documents gone following update
That is normal and documented by Apple. (yes it is a known bug, but you didn't lost anything. They were all moved to your iCloud under Documents and/or Desktop folders.

You have to download them from iCloud again

If you want to change settings:

Change this setting under System Preferences -> iCloud (save "Documents and Desktop" on iCloud.



but this "problem" of missing just happens on Upgrade. If you like you can continuing syncing Documents and Desktop to iCloud. It is just that you will have to download them at least once, now.