ITunes could not restore the iPhone "___'s iPhone" because the backup was corrupt or not compatible

Question

Ok so bear with me here, it is somewhat of a long story.
     I had been using an iPhone 4 for a while, with an old iTunes account that has all my stuff from over the years on it, on my computer. A week ago, I dropped by iPhone 4 in the sink and it got covered with water, despite quickly pulling it out, putting it in rice under a lamp, the phone was shot, and I was without a phone. My Dad, who is on the same AT&T plan with me, was using an iPhone 3. He was available for an upgrade, so he got a new iPhone, and gave me the iPhone 3. Now i'm not an apple master or anything but I have a good idea of what I am doing, normally, I backup my phone to my computer every few months. Basically everytime I plug it in to my computer which isn't very often because I just charge it with the wall charger. So got my SIM card with the same phone number and all, and obviously, while still being my number, it had my dads apps, messages, contacts and photos on it. So I bring it home, and plug it into my computer, I cancel the intial sync, and right click on the phone on the left side of iTunes and hit "restore from backup" I look through the list of backups, and the most recent one I see is from Dec 11, 2011. Which is surprsing because i'm pretty sure I had backed up since then, but I say whatever i'll still get contacts apps and most pictures back etc. So I hit it, and go through with it, and it tells me there was a more recent date of backing up, relieved, I click on that and continue, the normal bar comes up it says something like estimated time 30 minutes, so I walk away, come back 5 minutes later, and I get an error message saying, "iTunes could not restore the iPhone "____'s iPhone" because the backup was corrupt or is not compatible with the iPhone." Confused, I go back and try again, however this time I click on "old backup (the dec 11th one rather than the newer one) and the same thing happens after a few minutes. I go back a third time, and select a time from August of 2011. And I hit restore, and it goes through. However, this happened to be a backup I made right when I got my new iPhone 4, and therefore I basically restored my phone, to having nothing. Thats where I sit right now, with none of my contacts or pictures. I'm not sure if I backed up to iCloud or not and i'm not sure how to retrieve that. Some extra things: When I try to sync my iTunes library and apps onto the new iphone 3, I need to greatly reduce the number of songs and apps beacuse this iPhone is only an 8gb while the old one was 16, (I don't think that is the reason I am getting the error message though because when I sync it clearly says "Your iPhone does not have enough space). Also, this is obviously an iPhone 3, not an iPhone 4, updated with the most recent iTunes software, which, I believe is 5.1.
Any help would be greatly appreciated as I have over 1,400 pictures saved on my old phone (very important things to me) and a contact list of over 300 including important friends, coaches, teachers and workers.
Thank you very much, if it doesn't say my email on here try me at [email protected]
Thanks again
-Drew
Edit: The current phone is an iPhone 3G, not a 3Gs.

Answer 1

ashleyfrg2,
you will need to restore your phone as a new device and NOT from backup.  If you've been using your phone as recommended, you should have minimal data loss:  Photos should have been imported to your computer right after taking them; contacts should be safe in a cloud service or on your computer.  You CANNOT downgrade to 4.3.3.