Praise the good is great, and ignore 'most of' the bad!
With my 2.5 year old, I give her warnings that in x minutes we have to put on our shoes (or whatever)so that we can go out to the [insert fun place]. Sometimes I put the oven timer on so when it beeps thats time to go - she likes that because then she is telling me what to do - she thinks she has a bit of control over things
If she doesn't cooperate, I tell her I will count to three and if she has not (eg) fetched her shoes I will have to do it for her. She's Little Miss Independent so that works quite well a lot of the time.
For naughty things she gets a warning that if it happens again she has to sit by the door (our time out place) or if it is really naughty (hitting/biting etc) she goes straight to the door, no warnings.
If she doesn't speak nicely to people I say that I don't want to help a girl that doesn't use her nice voice to speak to people and she needs to say sorry and ask nicely using please, before I will help her.
And she gets lots of praise for what she does do nicely.
It is an exhausting age and its mentally tiring trying to be one step ahead all the time. At least your newborn is still new and not crawling and getting in your DS' way - you have a good age gap.
If its any consolation I have found it easier 2nd time round (DD's brother is 4) because the toddler can learn from the older child and you can use them as a bit of an example 'look how nicely x is sitting, I wonder if you can sit as nicely as that?' sort of thing.
Time out prob could well make him more defiant at first because he'll be thinking 'whats going on, I liked it when there weren't any rules' - but you are doing the right thing in setting him some guidelines so he grows up happy and well behaved.