If you plan on tossing your old iPhone for the new 3G version next month, you may want to think twice before you do. Just like any other computer platform, you can pull data out of the memory using tools that are readily available. To most people this isn’t a big deal, but to the paranoid this is life or death.
Since people use their iPhone for all kinds of computing, the information stored could (the key word is could) be used to steal your identity. So there are a few people out there trying to figure out the proper way to overwrite your data.
The one that most people are trying is copying several playlists multiple times to your phone, thinking this would eventually overwrite the memory, zero it out in a sense. The first flaw with this is that the memory will most likely still have trace fragments that could be pulled. The second is that no one is sure how the file system is set up on the phone; music and application data may be stored in different places.
If you’re going to sell your old iPhone, it’s worth a shot. If you’re truly paranoid, then just sell it to someone you know is trustworthy, like a friend or family member. Safety first, people.