Tried to sync phone to itunes & i think i lost everything on my phone

i had been using my ipod for my itunes.  i finally wanted to convert and use my iphone for my music.  i connect to the computer and itunes asked if i wanted to set my phone up as a new phone or use my ipod.  i picked ipod figuring then my songs would transfer to my phone.  then my phone restarted and it appears my phone is now brand new and all the settings are gone.  my phone is making me set everything up, i.e. language, country.
does this mean everything is gone and my phone cannot be restored to how it was a few minutes ago with all of my settings/texts/contacts etc?

The prompt you mentioned is provided the first time an iPhone is connected to iTunes. This is designed to be done right away with a new iPhone. Had you selected as a new iPhone and not choosing to transfer the backup for your iPod Touch, no data on your iPhone would have been touched. You could have then selected to transfer music in your iTunes library to the iPhone.
Since you chose to transfer the backup for your iPod Touch, the data that was on the iPhone is gone unless you have an iCloud backup available for your iPhone.

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