Contacts Lost on iPod 4 Running 5.1.1 - Cannot Fully Restore

Question

Hello and thanks in advance for anyone who might be able to help me resolve this frustrating issue.
I am using an iPhone 4 Model MD146LL with OS 5.1.1. My carrier is Sprint.
Several days ago I attempted to make a call by using the Phone icon.
The call dialog window opened for a split second, then closed and left me back at the desktop. This happened the same way on the three subsequent tries to make a call.
I then tried Voice Control, and again the VC screen appeared for a split second and disappeared.
I performed a soft restart using the power button on the top.
When the phone came back up in a few seconds, every one of my contacts was gone.
All phone numbers were still visible in the call and messaging logs.
Everything else about the phone appeared fine except for the missing contacts.
I did a little research and saw that the most common resolution was to do a restore from a backup.
Now as to my situation with iCloud. I had never had occasion to use iCloud until four or five days prior to this happening when I wanted to transfer several images from my PC to the iPhone. I installed the app on my PC and it worked fine. The images synched to my phone and I was all set. I never opened the iCloud app on my phone during this process, nor had I ever opened it prior to looking to resolve the contact issue.Part of the suggested method of restoring was to go into iCloud and verify the backup and sync settings.To my great surprise every backup setting was turned off (I assume by default as I had never even been in iCloud settings before) except for Docs & Data and Find My iPhone. In the Storage & Backup section iCloud Backup was turned on.
I then preceded to follow the instructions I located on several sites including this one to Reset the phone, and restore from an earlier backup.
This seemed to work fine and the phone went through all the steps of a reset, prompting me to restore from an iCloud backup which I found dated two days prior to the first problem. I selected it and the restore continued with the expected duration showing along with a progress bar. After about 20 minutes I swiped the unlock to check the progress and the desktop was now showing along with a message telling me to continue my backup with WiFi which I did.
Then nothing else would happen.
I now had a phone with all my contacts still missing, although the logs were still there, and dated to the restore date.
Additionally, every single app I had downloaded or purchased was missing, along with all my photos. The photos showed the correct number in each folder, and even had gray box icons where the images should have been.
After researching a little more, I checked the iCloud settings under Storage & Backup and the message Stop Restoring iPhone is there and the message says it is currently being restored. I left it overnight but the next morning nothing had changed.
At this point I was leery of doing more harm than good on my own and visited an Apple store. The rep I spoke to was less than enthusiastic and in so many words told me it was a known issue on OS 5 and that I could restore it. I retold my story in case he missed the whole point of my already trying the steps he was proposing. He then suggested that it might be due to the phone losing WiFi and that I should try again and then proceeded to try to sell me a new phone.
I decided to try to work the problem again again and have followed the same procedure several times, using all three backup dates available all ending with the same result described above.
I had thought that the 3G network might be taking over and bumping the WiFi as a couple times I noticed a quick service indicator switch between the two when I unlocked my phone. So I took the phone to a location where there is no 3G access ( we live in a rural area) and performed the restore again. The only difference now is I can't activate my phone with Sprint. So I have a brick at this point.
One last thing to note: I checked if I had ever backed up via iTunes and I had not either by iCloud or onto the PC. (I know shame on me but when we got the phone we were told about the wonderful iCloud service taking care of all that for me.)
I believe that about covers the problem and my steps to remedy. I again thank anyone who might suggest a solution. Please let me know if there's more information I might need to provide or anything that might need to be clarified.

Answer 1

That is exactly what I have been doing. Which is what the rep at the Apple Store suggested I do as well.
However, I end up at the same place where the phone stops restoring, but there is a button in iCloud under Storage & Backup that says Stop Restoring iPhone - This iPhone is currently being restored and will automatically back up when it is done.
So the restore never fully finishes - that was the point I was making when the rep suggested a drop in WiFi due to 3G taking over or another issue. The entire time I have tried the latest restore the phone had been within 10 feet of my wireless router and there has been no downtime.