An iCloud backup is initiated from a device that is signed into iCloud, so if you sign out, then until you sign back in, no further backups will be done. Any backups that you already have done will remain intact, however.
I sign out of i'Cloud on my iPhones fairly regularly to do testing for this support site. When I sign back in, all of my iCloud data is restored (not iCloud backup data, but the iCloud data you can see when you log into iCloud.com, or when you select what you want to sync with iCloud when you sign in under Settings>iCloud on your device: Contacts, Calendars, Messages, Notes, Mail, Reminders, Find My iPhone, Photo Stream, etc.). These are all stored in iCloud and are updated dynamically as you update or change them on your device. They are not backed up since they actually "live" in iCloud all of the time.
When you back up to iCloud, a "picture" of your device is created and stored in your iCloud storage. This saves the information on your phone as of a fixed point in time. Your backup is used to restore your phone to when you have had to erase it, or it can be used to set up a new phone to "look like" the phone that you backed up from.
So, when I got my iPhone 5s, I had created a backup of my iPhone 4. When I set up my new iPhone 5s, I restored it from that iPhone 4 backup, so that when it was done setting up my phone, it looked just like my iPhone 4 did at the moment I did the backup of that iPhone 4.
Various issues can also require you to erase your phone, or sometimes may put your phone into "Recovery" mode, and when that happens, you would want a backup to restore from so that you don't have to set up your phone from scratch.
But again, signing in or out of iCloud is really no different than signing in or out of iTunes. When you sign out of iTunes on your computer or your device, you don't lose all of your iTunes library, or all of your iTunes purchases. As soon as you sign back into iTunes, you have access to all of those things. iCloud is the same way.
If you can, go to iCloud.com on a computer and sign in with your iCloud ID so you can see what is stored in iCloud itself.
If you want to see what items would be backed up to iCloud when you do a backup, go to Settings>iCloud>Storage>Manage Storage, and then click on your device name. That will then take you to a screen that will show you your next Backup size, and which will also show you all of the items you have checked to back up. Even though it lists apps in that list, it doesn't actually back up the apps themselves, but it does back up the data you have saved for those apps. Each item shows how much room that particular backup item will be using for the backup. You can select fewer items to be backed up if you wish.
If you want to back up to iCloud before you do an update, make sure you are signed into iCloud, click on Settings>iCloud, scroll down to where it says "Backup", and tap on that. You will then see an option to Back Up Now. Once the backup indicates that it has completed, you can go to the menu indicated in the paragraph above to verify that your backup has completed.
Here is a support site that has a lot of info on iCloud that may help:
http://help.apple.com/icloud/#mmd0558ce3
Feel free to post back with any questions or concerns you may still have.
Cheers,
GB
