What is the relationship between iCloud and the App Store?

My wife has an ipad and has purchased some apps from the App Store. I have a new iphone5c and managed to load one of her purchased apps onto my phone by using her App Store ID and password. When I did this, a cloud symbol appeared and I assume I was not charged for the download. I have some questions about how all this works.
I have not, to my knowledge, set up any icloud account for my new iphone. Did aforementioned app download from her icloud?
Does this mean that I should not set up an icloud account of my own on my new phone? What about backing up my contacts? I would like to continue sharing purchased apps.
Can you use the same icloud account on more than one device? If so, would they have to have identical contacts and apps?
My wife also has a new phone; should she set up another icloud account?
Is my Apple ID related to either the icloud or App Store?
If anyone can help me sort this out it would be greatly appreciated.

ICloud and the App/iTunes Store are different services from Apple, you can use either by logging in with an Apple ID, you don't need to use the same ID for all services on the same device.
You can both share an ID for the iTunes and App stores so you can share purchased content but each use different ID's for iCloud, so you have your own contacts, calendars etc. you can use the same ID on more than one device.

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Hi jchelpid,
Thanks for using Apple Support Communities. This article has instructions by service on what to do after changing your Apple ID:
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http://support.apple.com/kb/HT5796
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What is the relationship between iCloud and the App Store?

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