HT1766 I had a new handset delivered today due to my old one being damaged. As I went to restore from iCloud backup it is telling me I can't due to the handset not having iOS 7.1. How can resolve this issue?

I had a new handset delivered today due to my old one being damaged. As I went to restore from iCloud backup it is telling me I can't due to the handset not having iOS 7.1. How can I resolve this issue?
Could I select 'Set up as New IPhone' and then update to iOS 7.1 and then proceed to restore the phone from my most recent iCloud  backup ?
Any help with this issue is greatly appreciated.

Hi again razmee209!
It has been updating since your last message and it says there's another 6 hours to go, does this sound right or is there a possibility I've been sent a re-con and the update will slow down my new handset considerably?!

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