I know that using Erase all Contents and Settings destroys the encryption key, securely wiping your data, but does simply doing the restore through iTunes then setting it up as a "New iPhone" do the same thing?
IPhone – Does iTunes iPhone Restore wipe the encryption key and securely wipe your data
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Interesting... What happens when you plug in your iPhone to the computer? What's the message of iTunes? As far as you can find the iPhone from your iTunes, you can always do the backup by right-click on your iPhone icon in iTunes and select "Backup" to force it to back up.
However there is one thing you should know: based on my experience when upgrading the iOS 5, even I did the force backup as above, after restoring it still not the same as the point when I did the backup. I am not sure whether it really "backups", but at least this is an option.
No, you need to wipe the entire device using the settings found under Settings > General > Reset > Erase All Contents and Settings. Simply deleting items from iOS applications does not provide any kind of secure deletion, and those files can easily be recovered (although that will be harder and harder as those blocks get overwritten in time).
This provides a one-pass secure delete call that can be liked to OS X's "Secure Empty Trash." While most 3rd party software won't be able to recover your data, government units have far more sophisticated tools that can retrieve data from far worse cases (even physically damaged storage).
This feature was introduced in iOS 2.0 and you can read more about it over at AppleInsider.
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Best Answer
Yes, as long as the iPhone is returned back to non-activated state, all contents are erased with no trace. The iPhone is returned back to non-activated state during both "Erase all Contents and Settings" and iTunes set up as new iPhone.