When the 3G iPhone ships many people will be selling their old iPhones. What they may not realize is some of data may survive a full iPhone system restore (the common way to wipe existing data). This observation is documented by developer Jonathan Zdziarski who posts this iPhone privacy alert on his web site:
May 5, 2008: iPhone Privacy Alert: Restore Mode Leaves Much Personal Data Intact Many iPhone users have felt safe sending their phones into Apple or selling them on eBay with the feeling that their personal data and digital past have been erased by performing a restore. Think those embarrassing photos are gone for good? Think again. While the restore process takes long enough to make most people (including many well-respected iPhone developers) assume the “disk” stored in NAND memory is formatted, it actually isn’t.