Disappearing bookmarks... reminded me of my own problems.
I'm running Mozilla 1.0.1 which is similar to Netscape 7.0 (I'm using IE right now so don't go by the useragent) . I had a similar problem last week, except that I lost MOST of my bookmarks, not all of them. I still had the first few dozen of them, and they were my own bookmarks, not Mozilla's default ones, but the rest were gone. My Mozilla profile's xxxx.SLT folder's copy of bookmarks.html, which was over 525KB before, was now only around 38k, so I knew the bookmarks were toast.
With Mozilla closed, I tried replacing my profile's xxxxxxxx.SLT folder's copy of bookmarks.html with a backup copy, also around 525kb , but afterwards Mozilla refused to start, getting stuck at the Splash screen. I then restored an even earlier copy, this one 509kb, and then Mozilla would open.
I think this problem might have been a symptom of other problems I had been having for weeks in the profile. Even with the backup bookmarks in place I was still experiencing unresponsive browser windows in Mozilla - I couldn't close the windows and constantly needed to CTRL/ALT/DEL "end task" out of them, while my husband's profile was working fine. When it got to the point that the Close Programs box also became unresponsive, freezing up windows, I replaced my profile's xxxxxxxx.SLT prefs.js file with an old backup copy I had saved in a different location and that seems to have fixed my profile problems, so far (knock on wood). As a precaution I also created a new profile, then closed Moz and copied over my bookmarks.html, abook.mab, cookies.txt. cookperm.txt, mimetypes.rdf, Inbox, Sent, etc. to the new profile.
Almost forgot: you need to make your OWN backup copies of your profile's SLT folder contents such as bookmarks.html and abook.mab
See
http://www.holgermetzger.de/pdl.html for files in the Netscape7 profile
UserAgent: Mozilla/4.0 (compatible; MSIE 5.5; Windows 95; T312461)