It's only possible if the iPhone 3 and the iPhone 4 are running the same firmware or the iPhone 3 is running a newer firmware version than the 4. You can restore an iOS device backup to newer or the same iOS versions, not down.
due to the fact that the iphone is a 3, not even a 3gs the software can only update to 4.2 so it wont let me do it because the iphone 4 is running ios5. When i try to run the old iphone from the backup, it says it needs to be updated to the latest OS to be able to sync, but due to old phone i cant. Do you know any way around this?? Thanks for your help though, really appreciate it
There is no way around it. iOS 4.2.1 doesn't have the proper instructions to change iOS 5 stuff into iOS 4.2.1 stuff. You'll have to jailbreak both devices and manually transfer your stuff. Even then, some things may not work properly.