iPhone 3GS 5 iPhone 5

I'm trying to set up my new iPhone 5. I'm coming from a 3GS and have everything backed up to iTunes. Next, I plugged in my iPhone 5 and going through the set up process but have hit a roadblock and not sure what to do next. The questions is...

This computer has previsously been synced with an iPhone or another iOS device.

- Set up as a new iPhone

- Restore from the backup of my 3GS

I could say 'yes' to both. I want to transfer my iTunes (contacts, music, photos, etc.) to my new phone. Which answer do I select?