Backup your older iPhone 4 with iTunes first and disconnect it from the computer after the backup finishing.
Select the backup file you just made from the restore menu in iTunes, then click "Continue".
Specify a folder to transfer iPhone 4 contacts to PC and manually transfer your wanted contacts to the new iPhone 5. Following these steps you can transfer contacts from iPhone 4 to iPhone 5 easily and quickly.
As mentioned above, after you successfully restore iPhone, it will be at the factory settings state, since all data are wiped.
Here are useful tips for you to avoid forgetting iPhone password, so that you would not fall into the tragedy to reset iPhone in a hurry. Or you can also transfer your iPhone 4 data with iPhone Data Recovery if you only want your contacts instead of all of them. Your iPhone 5 will have everything in your iPhone 4 after finishing restoring from the backup.
After you unlock iPhone screen password, you are allowed to change or reset iPhone password without jailbreaking and without losing data.

Have no backup files? Then you can try iPhone Data Recovery to recover all lost important data. Then you can use your iPhone as if it never was disabled by forgotten password and no data is lost. When the iPhone is off, hold down the Home button and connect iPhone to the other end of the USB cable, which should still be attached to your computer.
This method works for almost all iOS users, but in some rare circumstances, you may fail with it. If you are in this case, use Data Recovery Software for iPhone to help you recover all the lost data, including contacts, messages, call history, notes, Safari bookmarks, photos, videos and othe files. If so, refer to the article iPhone is Locked to successfully reset your iPhone without password first. With just a touch of the Home button, the Touch ID sensor reads your fingerprint and unlocks your iPhone. Restoring tweaks outside of Cydia can cause serious issues and could result in your device constantly crashing. But please note that the most important thing before you move to step 4 to reset iPhone, is to backup your data.

Then choose all of the files or just the ones you want to recover, and click "Recover" button to perform data recovery.
You can use Touch ID to unlock your iPhone or iPad without having to enter your passcode every time.
You can also use it to copy your installed packages, along with anything else that the tweak depends on, onto your computer. So you'd better backup all inportant files before reset, and then restore data from the backup after reset. At the end of the day, the best way is to make sure you list all of your Cydia tweaks and apps and re-install them through Cydia.

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