Restore iPhone 4s as NEW

My iPhone 4s has a bad operating system (confirmed at Apple Store)  I was given a new device and we restored my settings, etc. from backup.  I was warned that there was a possibility of the glitchy iOS being transferred to the new device.  Well after a couple weeks, this proved true.  Next step is to restore device as NEW.  Before I attempt this, I would like to be as prepared as possible to avoid losing anything permanantly.  I am looking for advice with this - since I won't be able to restore from a backup, will I need to create a new iCloud account?  Can I remove previous backups from both iTunes and iCloud?  Thanks in advance for any help!

This has been an ongoing issue since I purchased the phone new in January and it's beyond frustrating!