From ModMyi - Wiki

Have an iPhone? Want to sell it but afraid of access to your previous files. Even after a restore? Since a restore still leaves behind many things, NerveGas/BigBoss have came through with this Wipe tool. PLEASE READ ALL DIRECTIONS BEFORE USING! This will 100% wipe your iPhone, if you want to bring a iPhone back to Apple but are truly paranoid, i suppose this would work to. But this is ment for those selling their iPhones upcoming the 3G iPhone release. The iPhones system and partitions will be zeroed by this and will require a restore after using. Here is the Wipe tool, load this on to your iPhone via SSH. http://thebigboss.org/repofiles/nonrepo/Wipe.zip

1. Obtain a working copy of the iPhone Utility Client (iPHUC) on your desktop

  machine. iPHUC can be downloaded from http://code.google.com/p/iphuc/

2. Use iPHUC to place the device into recovery mode by using the 'enterrecovery'

  command, or force the device into recovery mode by holding in the home and
  power buttons simultaneously until the restore screen appears.

3. Once the device is in restore mode, exit iPHUC, then re-enter it. This will

  enable recovery commands. Issue the following commands to load and run the
  wipe software:

  $ ./iphuc
  recovery callback: Connected in Recovery Mode
  recovery callback: Entering shell in Recovery Mode.
  #: filecopytophone Wipe.bin
  filecopytophone: 0
  #: cmd setenv\ boot-args\ rd=md0\ -x\ -s\ pmd0=0x9340000.0xA00000
  #: cmd saveenv
  #: cmd bootx
  #: exit

4. The wipe tool will load and execute. You will be given a 30-second warning

  prior to commencing wipe to change your mind. After this, ALL DATA WILL BE
  DESTROYED.

Guide made by NerveGas, posted on MMi by me :)