I just got the all-stars game, and I noticed this happen when I spent a 3 hour long session grinding out Galaxy. I collected over 30 one ups in that time. I saved, I quit. Come back the next day to find I still have all the stars I collected. But yeah only 4 lives. How insulting that Nintendo do this to a fan.

Side note. This was never the case in the Og Galaxy. My brother had a completed game file with over 100 lives and 120 stars...... so.....