Can I restore my iOS 5.1.1 iPod Touch from a backup from an iOS 7 iPhone?
Nope, the iOS 7 backup can't be restored to the iOS 5 device through iCloud.

iCloud Backup will backup almost everything on the device including the contents of /var/mobile which therefore includes your messages as well as other data. There is never any 'Messages' option in iCloud Backup, but if the backup was successful then it has been backed up.