First, you're talking about restoring, not resetting.
Resetting is akin to a Ctrl-Alt-Del on a PC ... you press and hold the Home and Sleep buttons until you see the Apple logo, then release. No data is erased or lost, and no changes to settings or iOS.
Restoring erases your device, reinstalls iOS, then (optionally) reloads your backup. Your backup contains no apps, music, videos, etc. ... just the settings that define what items you had previously installed, then iTunes proceeds to load those items. Your backup also includes all your device preferences, as well as Wi-Fi networks you've signed into, and all your email account parameters, among many other things.
Second, there's a big difference between "syncing to iCloud" and "backing up to iCloud".
If you're using an iCloud email account, and you keep your contacts synced with iCloud, then these will all come back after a restore and reinstallation of your iCloud account. Even if you don't use iCloud for email and contacts, you'll still be OK if your contacts are stored within some other email account (e.g. Yahoo, Gmail, etc.) and they'll come back as soon as the email account is reinstalled on the iPhone.
But if you don't use any email account to manage your contacts, and if you don't use a local computer contacts manager (e.g. Outlook), then your contacts may only exist on your iPhone -- a dangerous thing. Your backup does not contain your contacts, at least not all of them. Apple warns users about this and seems to imply that the only thing backed up are Favorites and recent history*. So if you're not syncing your contacts with anything, don't rely on a backup to recover your contacts.
* From Apple: Your contacts are part of the backup to preserve recent calls and favorites lists. To avoid any potential contact data loss, back up your contacts to a supported personal information manager (PIM) or another cloud-based service (such as Gmail or Microsoft Exchange).
