OK, upgraded to 1.7 on steam, my save games disappeared!!

[Houdani]

I had the same problem. Here's what I did to get the games back...

Open Steam.
Go to My Games.
Right click on King's Bounty.
Select "Launch Save File Repair Utility"
In the new window that pops up, click the blue folder icon in the top right.
Browse to your save game folder ... for me (WinXP) it was My Documents\My Games\King's Bounty\$save
(Note that I made a copy of the $save folder as a backup before I did this.)

The utility will now scan the folder and identify your save games. It should then prompt you to repair the files.

Close the utility and then start King's Bounty. Play for the next few hours and then go mow the lawn or something.