There are several types of benefits in connection with IRAs:
-- contribution to traditional IRA may be dedutible on your tax return.
-- tax liability on earnings in Roth IRA may be completely waived.
-- tax liability on earnings in traditional IRA is deferred till distribution
So - you if you can't deduct contribution into the traditional IRA - your better choice is to contribute into the Roth IRA, but if you can't contribute into the Roth IRA because of limitations - you may contribute into traditional IRA, but would not be able to deduct your contribution - so you would be able to get minimal benefits - but still will be benefit from contribution.
"were you covered by a retirement plan?" - the answer is yeas because you are covered - that was your choice not to participate - but you ARE covered.
How the contribution limit is determined?
Assuming you are single below 50 and with AGI $58,000.
If you earn less than $53,000 - your contribution limit would be $5000,
but with AGI $58,000 - your contribution limit will be only $2500 - so - if you contribute $5000 - only $2500 would be deductible , and another $2500 will be not deductible.
In this case - you better to contribute $2500 into traditional IRA and another $2500 into Roth IRA.
The worksheet "Figuring Your Reduced IRA Deduction for 2008 is on the page 19 - http://www.irs.gov/pub/irs-pdf/p590.pdf
Let me know if you need any help.