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In order to transfer your contacts from your old iPhone 4 to a brand new iPhone 5, you should transfer them form your iPhone 4 to your computer or Mac first, thus you can transfer them from your computer to your iPhone 5 later, in this way, you can make it true to transfer contacts from your iPhone 4 to your iPhone 5.
 
restoring from iCloud is easy, but MOST people have more than 5GB worth of stuff on their iPhone. (camera roll pictures alone make up the bulk of backup data)

Backing up thru iTunes is the most surefire way to do it.
 
Er.....somebody said that we cannot transfer contacts between two iPhone with iCloud....However, I just successfully transfer them half month ago..
 
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