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When I purchased a 3gs from someone through Craigslist, we tried to use the reset all settings method of clearing his data. I let it go for more than 5 hours before giving up and restoring as new through iTunes.
 
on the iphone 4, the max is 5 min. This is due to the fast processor. On the 3gs it should take anywhere from 10-20 min.
 
on the iphone 4, the max is 5 min. This is due to the fast processor. On the 3gs it should take anywhere from 10-20 min.

When I bought my iPhone 4 and turned over my 3GS to Radio Shack - reset all took less than 2 minutes
 
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