First to clarify, you do not lose your data or applications with the 'paper-clip' reset. You will though with the soft factory reset, which effectively wipes the Tablet clean (but will leave your 3.1 HC and factory installed apps OK).
Most of the discussions so far captured the real issue with Acer Support and the Iconia Tablet. I had my 1st experience with them about 3 weeks ago when the WiFi connection stopped working after the FOTA upgrade to Android 3.1. The support person casually told me to perform a factory reset to resolve the problem! Without any caution/warning on the loss of data and installed apps that will result. Had to do that in the end though after speaking to a level 2 support person. The Wifi has worked OK since then in various locations, UNTIL this morning! I tried the paper-clip reset suggestion over 15 times with different combinations of 'forgetting' the SID etc with no luck. However I found out the reset worked ONLY when its performed while the Tablet is attempting to connect to my WiFi (before it goes into the disabled state). Maybe its just a coincidence, but that was how I eventually got WiFi connection.
Its just surprising that there's no word or explanation from ACER on the problem. Maybe that's what you get from buying a Tablet from a hardware company that is demonstrating a clear lack of skills in software support. Shame, since the Iconia is a fantastic tablet when it works fine, and I'll keep for a while -hoping I wont have to have to carry a paper-clip everywhere! - or until more 'serious' vendors such as Samsung or Amazon come out with competing alternatives.