Resetting phone
Press HOME, then MENU and tap Settings.
Scroll down and touch and SD Card memory.
Find the phone's internal memory section, then tap Reset. factory default.
On the Reset screen. factory settings, tap Reset the phone. Enter your schedule
Source: Tech arena
Resetting the phone will erase all data, including downloaded applications, and restores the factory settings of the phone, that is to say, the state it was before you do not turn for the first time.
Important: you should back up all important data present on the phone before restore its factory settings.
Note: You can download and reinstall all applications on Android Market purchased phone.