Here's my understanding.
iCloud backups backup your app data, pics, settings, and documents. It does NOT backup purchases such as music, TV episodes, movies, or video in PhotoStream.
Wifi syncs function the same way as USB syncs on your computer. It will sync music, TV, movies and video on your camera roll.
One question, I have use an ewallet. does iCloud also sync the data in my wallet? On another post here a guy restored from iCloud and his DataVault data did not come back but that app has a 'restore' function which restored his data. I don't know where it restored from.
I'm tempted to go through the entire exercise this weekend just to check it out for sure. I'll just backup via UBS first so I can restore if i need to.