Why does photoshop delete preferences every update and how do you get them back?

Preferences are version specific, and there's a reason for that: a setting may not have exactly the same meaning with new code.

By popular demand there is now a checkbox in the installer to migrate settings and preferences, but it is slightly risky. Not in the sense that you break anything, but preferences that are corrupted or just slightly misaligned can give very diffuse problems and unpredictable behavior, and it's often impossible to tell where the problem really is.

The preferences file is prone to corruption because it is rewritten on every application exit. An irregular shutdown can easily corrupt it. This is in contrast to read-only program files.

Personally I never migrate preferences. I take the opportunity to start with a clean sheet. Ten minutes well spent.

You can use Advanced options in the Creative Cloud Desktop app to select Import Previous settings and preferences either with Auto-update or if you manually update your apps.