You may be using the newer Lion or Mountain Lion operating system on your Mac. If that is the case, AirPort Utility will look a bit different.
Open Macintosh HD > Applications > Utilities > AirPort Utility
Click on the Time Capsule icon, then click Edit in the box at appears
Click the Disks tab at the top of the next window
Click Erase Disk
The "Quick Erase" option will be fine for your purpose and it should only time a minute or two