Transfer Data/photos/apps from iphone 4 to iphone 5

1) Sync your current data to iTunes

2) Setup your iPhone 5

3) When the wizard reaches a stage there should be 3 options:
-Setup as new iPhone
-Restore from iCloud Backup
-Restore from iTunes Backup

4) Choose Restore from iTunes Backup

5) Choose the correct backup from the drop down list (if any other backup exists)

Thanks, I wasn't sure there would be such an option. Will it notify my for any incompatibilities? Or will I have to find it out manually checking one by one all apps (cydia/app store) ?

The only way to get photos, and texts is by restoring the iPhone from iTunes. Apps can be redownloaded via the App Store on the iPhone, then there's a button for "apps not on this iPhone". Then you/he can selectively pick or choose all of them to redownload to the phone over-the-air. Unless you sync most of that stuff to iCloud, then over to the new iPhone. Don't know if that's an option for you.
What's more about transferring iPhone data, try to refer the following articles and find out what you need.
www.iphone-mac.com/how-to-iphone.html
Hope that help you a lot.

Photos is the least of my worries, but thanks. I dont have icloud yet. I am in the process of updating and will try your suggestion too.

Well, you can upload your data on iPhone to the cloud, and then get them to the iPhone 5 by signing in the same iCldou account. Of course, there is other way for different kinds of data. For example, you can transfer photos from iPhone 4 to iPhone 5 with Photo Stream:
Tap on "Settings" on your iPhone. Select "iCloud" and enter "Photos" to ensure "My Photos Stream" is on.Follow the operation above on your iPad. But remember, you should log in the same Apple ID on both devices.Turn on "Photos" on the iPad, and select "Albums" and "My Photo Stream". You will find all images recently captured on your iPhone appear on the iPad. Choose the photo you want to save to iPad. Tap on the share button in the lower-left corner and then select "Save Image" and it is done.