Set up as new iPhone or restore from iCloud?

Hello,
I have the iPod Touch 3G, 32 GB.  I hope to be getting the iPhone 5, 32GB in the next few days.
Just asking if I should set up as new iphone or choose restore from iCloud?
I do want my photo apps and photos to be saved/synched to my iPhone.
Which is the best way/right way to do this?
Thank you!

Hi Kappy,
Thank you for your reply!
It is a must that I use iTunes to backup my iPod Touch?  I use iCloud for this now and would rather continue using iCloud.  Is this okay or do I change it now?
What are my first steps I need to do when I turn on the iPhone 5?  Besides a big smile and being happy.  lol
Thank you!

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