unable to backup to iCloud

I want to prepare for iOS 8 upgrade.

So far I have been using iTunes to backup my iPhone.

I want to "erase" the iPHone, install iOS8 and restore partially like messages, calendar, contacts etc

I don't know if this is possible with iTunes. So I was thinking I could use iCloud

Below are my settings



I have 5GB free space and with the above settings, I always get a message that I don't have enough space. I am not backing up photos etc,

Any ideas if it is possible to backup iPhone within the 5GB limit?

thank you

Anyone? This is my first iCloud backup but somehow it doesn't work.