How does one factory reset the phone?
Very carefully
(0) Before you do anything, make sure you have all your contacts, calender appointments, email, notes, etc. backed up either to the cloud or to a PC. You WILL loose all the apps you installed off the Market, so make sure you make a note of the ones you want to have again after you reset the phone, because you'll have to re-download them again after the factory data reset. Also, all your shortcuts, wallpaper, and widgets on the home screen will be replaced with a default set, so be sure to make a detailed note of how you have it unless you feel like starting all over again from scratch.
(1) SYNC UP! Go to Settings>Privacy. Make sure "Back Up My Data" is checked, and make sure "Automatic restore" is checked too. Then go to Settings>Accounts & Sync. Turn on Google Synch if it's off, and make sure Background Data and Auto-synch are both on, too. For best results, if you're WiFi is off, then turn it on and connect to a hotspot. Then Synch up your google account, and then get on the web and check that your gmail, Google Calender, Google Contacts, etc is all synched up.
(2) READY, SET, RESET! Go to Settings>Privacy and press "Factory data reset". DO NOT I repeat DO NOT check the "erase SD card" box unless you want to loose all your mp3s and whenever else is on the SD card. If you are ready to reset, then press "reset phone"
(3)AND NOW WE PLAY THE WAITING GAME. The phone will reboot, but it will take a few minutes to reset everything. The system is restoring the whole OS to it's factory default setup. Anyways, just be patient; This can take quite a while.
(4)WELCOME BACK, ANDROID. Eventually, you should get the familiar boot-up screen, followed by a screen welcoming you to your "new phone." It's gonna hit you up with some prompts now, just follow the on-screen instructions. When you're done, you'll have a choice between the default Android home screen, or LG's customized home screen. Choose one. As I said in step (0) above, all the apps from the Market were effectively uninstalled and erased from the onboard storage, and all your home screen icons, wallpaper, and widgets have been replaced by a default set, so it's time to go to the Market and do some downloading. Then, customize your home screen again with wallpaper, widgets and shortcuts how you want it. This is also a good time to re-pair your bluetooth devices, and be sure to turn on Goolge Synch so it can get your contacts list, calender appointments, gmail, etc.
Good luck.