This is very very odd.
1.8.5 does use a new location for all Yummy settings, inside Application Support, which is required for the Mac App Store, but the old location (inside Library -> Preferences) is still supported if it exists!
I don't know what is moving them to the Trash though. Yummy is not coded to do that...
I am investigating, but I am actually away on vacation for 2 weeks, so it's tricky as I don't have my development environment here.
My advice for the time being would be for any upgrader to move your Yummy FTP folder from Preferences to Application Support.
As soon as I have more info I will post back. In the meantime, I am sorry for any inconvenience.