Next time you upgrade just do set up the phone from the computer and don't even bother with icloud.
This is horrible advice.
if you back up more then one phone on icloud it won't separate the 2
This is simply not true. Maybe if the phones are given the same name it will, but not otherwise. Source: I have 3 separate iPhones, 1 iPad, and 1 iPod touch back up in iCloud currently.
ETA: Also, Best thing to do is have your separate iCloud accounts for you and your wife. You can still use the same iTunes account on both devices. It's not like it costs anything to set up a separate iCloud account.
This post was edited on 1/10 at 2:01 pm