iPhone-How to upgrade, wipe old phone

I am planning on buying an iPhone 4 any day now for both me and my fiancee and currently both of us having iPhone 3G's. My plan is once I get the iPhone 4's to sell the two iPhone 3G's on ebay.
I have two questions:

I have never gone through an upgrade before. I am looking at options such as Radio Shack, AT&T (Refurbished) and Apple. When I buy one do I activate it on the spot in the store or do I get it and then have 30 days to active it? I know when I connect my iPhone to iTunes it backs up.
When I get a new phone do I connect to iTunes to activate and then restore the backup?

The second question is how to securely and completely wipe the old phone. I want to make sure since I'm selling it on ebay that no one can get data off of it and obviously I want to do this after I active and have my new phone working. What is the best way to do this?

Thanks for your help with the above questions.

When I get a new phone do I connect to iTunes to activate and then restore the backup?

Click to expand...

That's it. Plug in, activate, restore, sync.

As for secure wiping. The option in the settingss will wipe the phone and restore it back to factory fresh. There are tools for jailbroken phones to securely delete the flash drive. But you won't be able to wipe it to a forensic level.

I guess it all depends how much you are concerned about the content. If it's a big concern for you I'd just wipe it and give it to a family member to use rather than selling it on eBay