How do your restore from itune backup so that your phone will work?

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I just updated my iphone 4. I am trying to restore from itunes backup. It tells me to connect to itunes. I do and click on restore backup. After it has restored, my phone asks me to setup. It takes me right back to pick from - set up as new phone, restore from icloud, restore from itunes. I can't seem to get passed this screen why? Can anyone help?
 

Just_Me_D

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1. Did you create an actual iTunes backup of a working iOS device containing your information?
2. If you did, then when you connect your device to iTunes, and select "restore", the process will initiate. Afterwards, you will be asked if you want to restore from a backup (iCloud / iTunes) or restore as new. Choose restore from backup and then choose the iTunes backup with the date corresponding with the backup you want to restore.