Yes, do a factory reset and wipe everything off the N7 before sending it back. All your apps are already backed up to Google Play so you don't need to worry about getting them back on your new N7. Any data you may have saved on the device would be lost after the wipe. Although, many web browsers let you back up bookmarks. You'll also lose all of the custom settings you may have made to the device so you may want to note what they are so you can set the up on your new device the way you like it. I don't know about game data, whether or not it's already backed up somewhere online for some of your games. A lot of your game data is stored on the device and you'll lose it. I'll bet the Google Play store has an app that can capture data and can be backed up somewhere to restore later.