Hello. I have updated my iphone 4 to ios7 after doing a backup to itunes. I am caught in a loop of being asked to 'restore from backup' as part of setup and that restore failing because the phone already has it's content I believe. Please help if you can.

Hi. I have an iphone 4 that I have just installed ios7 onto. I had backed up the phone prior.
After the software install the phone rebooted and showed the 'Hello' setup. I am stuck because as part of the setup it asks me to 'restore from backup via itunes". I dont understand why i need to do this as I thought the ios7 install procedure would restore the phone with it's content.
I tried to restore from backup but it says I cant because there is not enough space on the phone. If I connect the phone to itunes, it shows that the phone has all my content, especially since iphoto launches and I can see all the photos it wants to download to iphoto off the phone.
I am caught in a loop. My phone has it's content, but the startup procedure on the phone will not let me progress until I have restored from backup via itunes. But it cant because the phone has no space!!
The only other option it gives is 'Set up as new phone".
Can anyone help please. Thanks.

You should be syncing your contacts with an app on your computer or cloud service (iCloud, Gmail, Yahoo, etc), and not relying on a backup.  If you haven't been doing this, start now and then restore your old backup.  You will then be able to sync the new contacts back into the phone.  However, you will lose all messages, etc newer thant the backup.

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