I have just d/I'd and installed Ep 4 on my Xbox 360. It has now deleted my save game and taken me back to the beginning of Ep 1.
I had a backup save on cloud but when I tried to load that, it did the exact same thing.
I'm not very pleased about this as I've now got to replay through Ep 1-3 again. I might not bother and dismiss the game altogether now.