How to completely reset an iphone to factory settings?

My old phone completly stopped working, so a friend of mine gave me his old iPhone. However i can't get it to totally reset. i already did the rest from the setting button, but when i plug it into itunes, it still says Erics iPhone, instead of my name. I havn;t tried syncing it because I wasn't sure if that would mess up or show up on his iTunes. does anyone know what the hell im talking about? any help would be appreciated.