Hopefully this information will help you understand about iCloud storage....
By default, iCloud accounts include 5 GB of free storage space, which you can use for the following:
- Documents in the Cloud
- iOS Backups
The following items do not count against your iCloud storage space:
- Photo Stream
HT4847 - iCloud: Managing your iCloud storage
I am unclear what you mean by "ive lost several items as itunes has not restored them either"