Reformating with OSX

After backing everything up, put your OSX disc in the optical drive and boot up whilst holding C. From here it'll give you the Installer screen. Head to Disk Utility in one of the menus (I consistently forget which one) and reformat your drive to Mac OS Extended (Journaled) and then go back to the Installer and install away.

Having said that, Mac OSX is not like Windows. Constant reformats should not be needed and there are plenty of better ways to free up space. Use an app like OmniDiskSweeper to find where your space is being used and drag unnecessary files to the Trash. If you're uncomfortable with trashing a certain file or folder (such as themes for iDVD or something) then drag it to the Trash but don't empty the trash. It'll still be taking up space but it will not be accessible by the system. So, if you notice no problems after a while, you can then Empty The Trash and get that space back.