My wife is getting new IPhone. At apple they told us to backup her iPhone so they can transfer her data to new phone. The ? Is does it have to bee an iTunes backup or canwe do an I clould backup up and what's the difference.

You can backup in iTunes or iCloud. Check out this article:

http://support.apple.com/kb/HT4137?viewlocale=en_US

Hope this helps!

This article should help you make the decision:

Optimizing your iOS backup experience (Should I use iTunes or iCloud to back up my iOS device?)

http://support.apple.com/kb/HT5262

Read up here iTunes: Backing up, updating, and restoring iOS software

Using itunes can be generally quicker than icloud depending on the speed of the internet connect. In my experience it's much faster to restore from an iTunes backup than an iCloud backup.

Zachary13 wrote:

My wife is getting new iPhone. Apple store told us to make a backup so they can transfer all data for other iPhone. Can backup be iTunes or iCloud and what is difference.

See Here > How to BackUp > http://support.apple.com/kb/ht1766