iPhone reset settings iCloud restore?

iPhone 4, running latest iOS5 release.

Can somebody please tell me if i did this wrong?

I went into iPhone settings, and selected reset all settings. My intention was to try and flush out the volume bug that has been attacking my iPhone.

So, after doing that the phone went into reset settings (not content settings etc just settings) mode and it reloaded as i'd have expected. I was then confused as i was prompted (after the language/location/wifi setup stuff) to restore from iCloud backup or setup as new. To be honest, i was scared it had erased all my stuff so i selected restore from iCloud backup.

After waiting 20 mins, the phone restarted and luckily it only restored settings, all my other stuff was there exactly as i'd left it. Including the volume bug.

My problem is that it erased podcasts/ringtones/photos etc and now i'm having to sync with iTunes to put it all back on. Apps appear to be ok and unaffected by it.

So.

1= What did i do wrong?

2 = Should i have selected restore as new, or would that have actually wiped the whole iPhone back to default?

3 = What has happened to iOS5 that just allows me to reset the **** settings like the older versions, or is it my fault?

Any help would be awesome. It definitely did not do a complete restore as apps i bought this morning that had not been there during last night's iCloud backup are still on my phone and did not need to be redownloaded or anything.

Thank you in advance guys/dolls.