How to erase my iPhone 3GS before selling?

Hello,

I want to sell my iPhone 3GS and I didn't really load many things on it (couple of apps, but I understand that those remain in my iTunes account).

I want the buyer to switch on the phone and see everything that I saw when I first opened the box, like a factory reset.

Which is the best way to do this? Via the iPhone or via iTunes?

Also, I have AppleCare on the phone. Will the seller be able to find out any personal information about me?

Thanks!