iPod to iPhone transfer help please iPhone 4S

It should just work.  Went through a similar process

myself iPod Touch 3G was getting full and decided

that I wanted to get wireless internet and phone service.

Went to the AT&T store, literally a block away, bought

myself a 64 gig iPhone 4S.  The store got everything

all set up as a phone. 

Got home, fired up my Mac and openned iTunes.

Plugged the new phone in got some pop ups asking

what stuff I wanted on it.  The first was if I was setting

up as new and answered yes. Then about 25 minutes later

(as I said had a 32 gig iPod Touch that was nearly full)

my new 64 gig iPhone 4S was up and running with all

my apps, songs, contacts, bookmarks, etc. And now had

28 gig of free space!!!!  Hopefully by the time I fill this up

Apple will have a 128 gig phone.

Thank you so much. I was very worried that I'd loose my music, and apps. Thank you for your quick reply!