I'm not 100% sure but I don't think a hard reset touches your SD card so you shouldn't have to reload you media or any data on your SD card. I do agree having to reinstall apps, set everything up again, etc is a bit of a pain though.
It's kind of like reformatting your computer after it's been running for a long time and starts to go wonky. When things go goofy it's always nice to start clean.
That is correct.
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Starting fresh is a lot easier than people might think.
Post hard reset:
1) Configure your accounts (5 minutes)
2) Delete & add any widgets you do/don't want (5 minutes)
3) Go through the settings menu and configure things the way you like them (5-10 minutes)
4) Test for 30-60 minutes before you start adding 3rd party apps.
5) Go to the Market and open up your downloads page. Before you install an app, check the latest comments being left for the app. Verify that there isn't a bunch of people saying things like "FC with Froyo!!!". Don't install apps that control the operating system (like task managers) or modify interact with hardware in any way (LED managers) and things like that. Be cautious. Don't just install 30 apps and see what happens. Unfortunately not all apps are compatible with Froyo yet.
The time you save from doing the above: Priceless.