From Wiki - Sharanam's Knowledge Base
A soft reset can be done by holding down the SLEEP/WAKE and HOME buttons for the 10 seconds.
Update the iTunes software to version 7.4 or higher from the Apple website.
Connect the iPhone to the PC. Doing so automatically displays the sync management page, and syncing process begins.
Let the sync process complete. Sync everything on the iPhone that you don't want to lose. This is because a Hard Reset restores the iPhone to its original state, which means all the data that was added right from day one is LOST.
Once the sync in complete, switch to Summary tab and choose Restore from the drop-down menu.
Wait till the iPhone hard resets.
After the process completes, the iPhone comes back up in its original factory state and prompts if you want to restore data settings.
Choose Yes to restore the synced data to the iPhone.
That’s it. This completes a hard rest of your iPhone.