I previously had an iTouch, now a new iPhone. Setup as new iPhone, or restore from iTouch backup?

I previously had an iTouch (3rd generation - 32 GB), now I have a new iPhone 4S. During the beginning of the setup process in iTunes, after reegistering the new iPhone with APPLE, when I am asked to set it up as new iPhone, or to restore it from my previous iTouch backup, which do I choose? It isn't clear to me, and I can't find the answer anywhere.
If I choose to set it up as a new iPhone, will I lose all my apps and all my previous settings (and start over)?
My computer is a MacBook laptop.

If you set up it as new, you will lose the settings, but not your apps. You can try to restore from the backup because you will recover your settings and your apps automatically

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