Will downloading 8.1 delete everything on my phone?

It's a good idea to backup, in case you run into a freak issue, but no you don't have to. Updating won't wipe your device.
 
But will updating to windows 8.1 preview delete everything on my phone, essentially hard resetting it?
 
This is what is recommended:

1. Hard reset your phone
2. Download developer preview app from the store
3. Install all updates
4. Hard reset your phone

Hard resetting will erase everything, but that is what has consistently provided best results. It may work without the hard reset, or it may not. Most of the problems reported on this site were due to skipping the hard reset.

IMHO if you don't want to do a hard reset, you shouldn't be downloading the developer preview.
 
No it won't delete anything.
However I found a hard reset helped after installing WP8.1 after having some troubles.
 
The act of updating will NOT erase anything.

BUT it is recommended that you hard reset (meaning ERASE EVERYTHING) should you encounter a problem.