iPhone 2.0 software: Connect to power when using Erase All Contents and Settings
Summary
As explained in the iPhone User Guide and the iPod touch Features Guide, with iPhone 2.0 software, you have the ability to erase all contents and settings. Before you tap Erase All Contents and Settings, your device should have a full charge. If it doesn't have a full charge, then connect the device to power and leave it connected until Erase All Contents and Settings is complete.
Products Affected
iPhone, iPod touch, iPhone 3G
When you tap Settings > General > Reset > Erase All Contents and Settings, iPhone OS will remove all contents and settings by writing ones to the data partition.
This can take one to four hours or more, depending on the storage capacity of your iPhone or iPod touch, and you will see the Apple logo and a progress bar indicating approximately how much is completed so you can estimate the time remaining.
If you run out of power or reset iPhone before it is complete, you will see the Connect to iTunes screen after you connect to power again. If this happens, and you want to ensure your content is fully erased, Restore iPhone, connect to power, then select Erase All Contents and Settings again.