Am I allowed to duplicate results from my own arXiv paper in a journal publication? I had put up a paper on arxiv about 4 months back, which we had planned on submitting to a journal. However, before I submitted, we got some good reviews and ideas from a colleague at my university. All of the original results were correct and accurate, but now I would like to add some additional simulation results, a more detailed analysis, and also give an authorship to the colleague. However, in this time span, my arxiv paper has been cited a couple of times. 

My questions are:


I would like to change the title of the paper and do it from fresh, and submit the newer version to the journal. In this case, should I just cite my arxiv article for all the background work, and just present the new contributions (which would be only 1-2 pages); or can I copy over all the content from my original arxiv article? 
If the latter is possible, how do I indicate to others that they should cite the newer article and not the original one?


Field of research: At the interface of applied mathematics, engineering and computer sciences. Paper likely to be submitted to a SIAM journal.
Manuscripts in the arXiv are permanent and citable, but do not count as peer-reviewed publication.  Therefore, there is no inherent problem either with using your arXiv work as part (or all) of a manuscript submitted to peer review or with citing your arXiv work as background on a new work that builds upon it.

If you re-use your arXiv material in a manuscript, however, there are two additional steps that you must take:


You must make the source of the material clear, in both the cover letter and the document itself.  I personally like verbiage such as:


  "Note: portions of this manuscript have been adapted from [cite]"

You need to check the policies of the venue where you submit it.  In some fields, such as computer science, most journals do not consider non-peer-reviewed venues such as arXiv prior publication, and so including such material is fine.  In other fields, such as biology, most journals do consider them pre-publication, and will consider it self-plagiarism.  These policies vary journal-by-journal, however, so you do need to check the individual policy.