I've never seen any ROM or Recovery instructions say to format system. I've flashed several ROMs and have only wiped the various caches, never formatted anything.
Thanks, I had never read that. It's not a part of most instructions I've read.
I also have never done that, and since my phone works great with CM7, I don't think it's a necessary step, but I've only been flashing ROMs a couple of weeks now.