Try "Will It Blend":
http://www.willitblend.com/videos.aspx?type=unsafe&video=iphone
This will guarantee no one will ever read the data... also no one will ever use the iPhone.
Since the iPhone uses a flash RAM for main storage then you should restore in iTunes and then write a full capacity of meaningless data and restore with iTunes. Do this several times if you wish but since the main storage is flash RAM and it doesn't have any "residual state" like a hard drive domain.
Discussion on:
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