Uhh maybe this is just me..I always set it up as a new device if it is a new device...meaning since 3G where iCloud was becoming a new and growing feature..I would make a new account for each device since. Idk why, I know I'm able to keep multiple restore points for back up, but I always made new email/apple account for 3GS then when I got the 4, repeated the process as well as 4S. So I have numerous accounts now but for each corresponding product.
Note, the iOS is constantly updated along with the phone and I assumed I had to update almost every. Single. App anyways so fresh install was likely better. The only con is indeed: contacts. I tried third party restore like gmail but I stopped since 4 because it was just a failing matter. 500+ contacts whoosh. Then again it's cleaned up. Those I don't keep in contact no longer need to be dead memory on my phone so