How to keep your apps when you upgrade your iphone

Hi there everyone. Like many of you peeps out there I have my sights set on the iPhone 5. I presently have a 3GS. A friend at work had the same but this week upgraded to the iPhone 4. One thing we spoke about and didn't have a clue about was, when you plug in your new iPhone to iTunes that has all your lovely purchases backed-up on it, what happens?
I have lots of paid for Apps and music on my 3GS and iTunes. What do you do to your old iPhone and iTunes so that, hopefully soon, my new iPhone 5, or in my friends case iPhone 4, can be the recipient of all the stuff backed-up on iTunes?
I'm sure Apple would have made this simple and not the case that you have to start again from scratch with a new iPhone.
Any help would be much appreciated.

Your apps, music, iBooks and so on are not tied to the device, they are tied to your Itunes/AppStore account.  As long as you are using the same account, you can put those things on as many separate iDevices as you like.  Just plug in the new device into the same computer and iTunes account as the old one, activate it with the same account and id, and then sync the things you want on it over.

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