I have two phones that are both on one Apple account in Itunes. Now that I am on ICloud updating the two phones are merging information. How do I separate the two phones into distinct accounts?
You can use different Apple ID's with different services. Create a new Apple ID for the second iPhone and use that ID for iCloud, while still using the same iTunes/App Store login.
There may be a way to manage how the devices sync (using the same account), but I have been using the above method successfully.