I've never worried about data privacy with Apple, if there is anything that I might be concerned with, I take it off, outside of that I typically create a new user account without a password for them to use while they work on it. I do make a backup of my computer but I've never been inclined to format my drive before sending it in for repair. I'm sure that Apple employee's have seen more private than you have to offer by just troubleshooting the issue. I read a story some time ago about a woman sending in her laptop complaining about iPhoto, they went to troubleshoot it and most of the pictures were of her in her birthday suit both with and without her husband. They gave no names or images, but they respected her privacy. As a support tech myself, I've seen a lot of things, text documents labeled "bank passwords" sitting on the desktop (of a 70 year old person's computer), as a domain admin I've had to wipe pornography off computers of wives, girlfriends, and mistresses.
Whatever you have to hide, they've probably seen it before, and they care about seeing it as much as you care about seeing the stuff in the glove box of my car.