i found that i could enable iCloud backups like so...
when the device is connected to iTunes, by going into the device (where the info/music/photos/podcasts tabs are etc) you get the various backup and sync options.
you can enable wifi sync in there, (doesn't seem to work on actual settings of device either) and you can also select iCloud backup rather than computer backup.
once enabled in itunes, they are enabled in the actual device settings. the actual backup still fails, BUT thats the only way i found to be able to enable the options in the first place!
lets hope, as suspected here, the backups aren't going through to manage traffic over the first couple of days.
ps, if wifi sync with iTunes is enabled, EDIT - if you want to sync to the computer for a physical backup copy of the device - you have to manually select the device and click backup as its not automatic when plugged in anymore, apparently.
the wifi backup is brilliant tho. ill still do manual backups to my computer every so often tho, especially until this iCloud backup actually works....!