The wipe feature is hidden pretty deep in the device to prevent accidental usage of the option. Navigate to the option through these menus:
Go into the main menu
Select the Options menu
Select Security Options
Select General Settings
Press the BlackBerry Menu button
Wipe handheld
Then you have to decide if you also want to delete third party software and enter the default password 'blackberry'.
The actual wiping will take about 10 minutes.
I tested it on a blackberry 8900.
Usually there are just contacts on your SIM. You can't delete them all at once, you'll have to delete them one by one:
Address Book
Press the BlackBerry Menu button
Choose SIM Phone Book
Select the entry you wish to delete
Choose Delete from the menu
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