Can someone please help me out? I currently own an iPhone and an iPad and my son has a iPod touch 4th Generation. iCloud works well between them, but my wife is looking to get an iPhone as well. If she uses a new Apple ID can she still use my purchased apps? Or if we use the same Apple ID can you separate contacts or would turn it off on one device?
You should have one AppleID per person that you use for iCloud, Notes, Contacts, Mail, Calendar and to-do's. You then pick one of these ID's to buy things in iTunes and the App store. You probably want to use the ID you have used to purchased music and apps with up until now.
So setup your wife's iDevice(s) with her new AppleID. When you are done, go into Settings/Store and change the AppleID you to your existing ID (only in the store).
Now you each have your own iCould but everything you buy can be shared between the both of you.
This is a seemingly simple question, but the answer is very complex because Apple's intended use case seems to be 1 person with one computer, one iTunes account and one or more iPhone/iPod Touch/iPad (iOS device)s.
Some facts to frame the answer:
Given this information, there are a couple of solutions.
You and your wife share a computer and an iTunes library. Since your devices and hers sync from the same library, you will use the same pool of media and apps. If your wife gets her own iCloud account, she can set that up separately from the shared iTunes account. See the following Apple knowledgebase article: http://support.apple.com/kb/ht4895
There are no technical problems here. Though it's conceivable that it would be impractical or undesirable to share a computer and an iTunes account.
You and your wife use separate iTunes accounts with separate iTunes Libraries, either under separate user accounts on the same computer or on two different computers. Here, you each keep your stuff separate, but you can authorize her iTunes library to use media from your account and vice versa. See Apple knowledgebase article: http://support.apple.com/kb/HT1420
You still probably want different iCloud accounts.
You use separate iTunes libraries, separate iTunes accounts, but your wife can sign into your iTunes account in the App Store app on her phone and download any of your previous purchases.
From Apple knowledgebase article ht1311: "The account ID that was synced to the device is displayed at the bottom of each page [in the App Store or iTunes apps], so you'll always know what account you are using on the device. Simply open iTunes or the App Store on your iOS device and scroll to the bottom of any page to see which account is currently in use. You can also see this in Settings under the Store option."
I'm sure there are other options, but these are what I see as the best scenarios in descending order. The first option is the easiest from a technology standpoint, but when you factor in human issues, the second option may be more desirable.
I hope this is helpful.
Your wife should get her own AppleID and use that for iCloud. To use the same apps as yours, she can enter your ID when prompted and buy new apps with your ID in the store. This is safer than using the same ID for iCloud and try to separate personal data.
I would most definitely recommend using two separate Apple ID's for iCloud syncing. While you can have multiple devices attached to a single Apple ID (as you do with your iPhone and iPad), all of the same information will be pushed to all devices, meaning you would not have the ability to maintain discrete contacts, calendars, bookmarks, etc. Apple ID's in general, and for iCloud use in particular, are really designed to be single user identifiers.
The good news is that using two separate iCloud ID's does not prohibit you and your wife, and your son for that matter, from still sharing App Store purchases. iOS devices maintain separate login information for iCloud syncing, App Store and iTunes account info. Once you have set your new phone up with iCloud, go to Settings --> Store and select the Apple ID at the bottom of the screen and sign out. After signing out, you will be presented with a Sign In button at the top of the screen. After pressing it, select "Use Existing Apple ID". Now enter the login information for the account all of your app store purchases are under. You now have iCloud syncing to your wives own personal Apple ID and her apps syncing from your already existing Apple ID. Just note that if either of you have the "Automatically download apps" feature selected, you will receive everything your partner downloads as well as apps you've downloaded.
If you have any more questions on this process, I'll be happy to try and expand.