Whoa! Waitone! There is no need to do a Factory Reset as part of the update. Let the update do its own restarts and all will be well. A Factory Reset is fairly drastic; it will flush out all of your user data and files. If you didn't back it (data, apps, whatever) up somehow, it'll be gone after the Factory Reset. Usually there's a lot of stuff on the SD and apps can restore, based on Market records, but a Factory Reset is actually more destructive than an update. Think at least twice before you pull the trigger on a Factory Reset.
Factory resets are not that drastic if you're prepared. And with everything that is stored on phones these days it'd be stupid not to back them up.
For contacts the main backups are either google, verizon's backup assistant, or export them to the sd card.
For apps the two main ways are appbrain or export them to the sd card.
Anything else (pics, music, vids, etc.) will most likely already be on the sd card. Either connect the phone to a pc or unmount the sd card & copy the data with a card reader.
For settings either take a pic of the screens or jot down the settings so you don't have to struggle to remember them later.
After having these safeguards in place, a factory reset should take anywhere from 1/2 - 2 hours depending on your connection speed and the amount of apps on your device.
As far as there not being a need to do a factory reset, you might get away with having no issues after an OTA update, but that doesn't mean that the device would not benefit from a clean install either. Currently I have not had to do a factory reset after GB, but I did after Froyo on my Incredible1. I almost always power down to charge the phone, so the system resets don't always fix the issue. And hard resets have never worked out for me except when the phone was locked on the wrong tower.
Another thing is a clean install might fix problems you don't even know you had (phone speed, radio issues, etc.).
Personally I use cloud based backups like Google & Appbrain, because if your phone gets lost, stolen or destroyed, the contacts & apps on the sd card maybe lost as well.