On a recent question several answers talked about the lack of Persian sources on classical Persian history so I was wondering would a lot of that knowledge have been destroyed during the sack of Baghdad or would it have already been lost in the 17 odd centuries prior anyway?
Followup: is there thought to be a lot of knowledge lost during the sack or would it have been stored in other places around the medieval world?
To answer your follow up question first, yes, a lot was lost during the sack. Eye witness reports tell of the Tigris turning a dark blue from all the ink coming off the manuscripts the Mongols threw in the river. Check out the Fihrist of Ibn Nadim, a catalog of books available in Baghdad in 10th century to give you a good sense of the scope of literary production in medieval Baghdad.
A lot of this was available in other libraries too, but the Mongols destroyed a lot of places on their way to Baghdad. The short answer is that we are missing a lot of written work that was produced before the Mongol invasion.
As for the impact this would have on sources for Cyrus the Great, remember that we are closer in time to the Mongol invasion of Baghdad (only 758 years) than the Mongols were to the death of Cyrus (1788 years). In those nearly 2000 years between the death of Cyrus and the arrival of the Mongols you had the invasions of Alexander the Great, the rise of the Parthians, the wars with Rome, the rise of the Sasanians, more wars with Rome/Byzantium, the Arab conquests, more wars with Byzantium, invasions by Daylamites founding the Buyid dynasty, invasions by Turks founding the Seljuq dynasty, long periods of civil war, etc. etc. etc. As far as preserving information about Cyrus, older knowledge had to compete with a constant influx of new ideas and world view. In the intermediary years you had the rise of Christianity and Islam.
Let's look at a point much closer to the death of Cyrus, the rise of the Sasanian Empire. Like the Achaemenids, the Sasanians came from Fars and they promoted themselves as revivers of Achaemenid glory (in some ways). They even added on to old Achaemenid monuments in Fars. But when it came time to write down history (as recorded much later in texts like Ferdowsi's Shahnama), they seem to know nothing of the actual history of the Achaemenids. [edit: they replace the Achaemenids with legendary dynasties]
Touraj Daryaee wrote an article about this matter whose title alludes me right now.
So, people in Iran and Iraq were already having some troubles remembering the history of Cyrus 1,000 years before the Mongols showed up.
tl/dr: There were over 1700 years between the death of Cyrus and the arrival of the Mongols in Iraq and lots of stuff happened in between.