Recently my wife learned the hard way that if you don’t restore from icloud correctly it is possible to overwrite your backup and loose you iphone data. The problem started when she was setting up her new iphone 4S at the AT&T store. The customer service guy went through the settings screens for the iPhone without restoring from the icloud. He then asked her to go into the settings and enter in her userid and password for icloud mistakenly thinking that the restore functionality was in the icloud settings area. Unfortunately this caused the new iPhone to then start backing up to the icloud overwriting her backup from the previous iPhone.
The correct way to do a restore is to make sure you go through the initial settings for the iPhone, setup Wi-Fi, and do a restore from the icloud during the setup. To get to the initial settings for the iphone you need to go into Settings then General and erase all content and settings.
It would be really nice if Apple would give a warning if someone sets up their icloud settings and already has a backup on the icloud already. It’s a rather glaring problem from a company known for it’s user friendly user interfaces.