Phone storage

The 5GB and 50GB are both iCloud storage. That is on an Apple server somewhere in the world, not on your phone.

Before you downgrade your iCloud storage plan make sure you are not using more than 5GB of it or you will lose whatever is stored on it. If you have iCloud Photos turned on (the default situation) it will be very dangerous to simply downgrade the plan.

Settings, your name, iCloud, Manage storage

If you have not already set up the new phone

See the instructions in:  Transfer data from your previous iOS device to your new iPhone, iPad, or iPod touch - Apple Support

Finally you need to decide how you will back up the phone. If you have iCloud Photos and/or iCloud Backup set up you may need more iCloud storage, not less.

My very small 2 cents ... any backup you have your computer may simply be called "iPhone". Change the name of the new device to not lose that previous backup.

Back to the experts for the valuable advice.

Assuming you have not previously set up the new telephone

See the directions in: Transfer information from your past iOS gadget to your new iPhone, iPad, or iPod contact - Apple Support

At last you really want to conclude how you will back up the telephone. On the off chance that you have iCloud Photos or potentially iCloud Backup set up you might require more iCloud stockpiling, not less.

[Link Edited by Moderator]

The phone has 128GB and the iCloud is 5GB. Neither will change.

Nice try at advertising