In this video we demonstrate how you return your Playstation 3 to factor defaults.
To confirm, this will return the PS3 back to the same state as it was when you first purchased it. This process will remove all data and any setting changes you have made to the console, make sure you backup your game saves before you reset the console.
Returning the PS3 back to factory defaults will not unlock a console that Sony has ban from its network, and it will not downgrade the firmware (operating system) to a previous version. You will also need to disable parental controls before you can reset the console to factory default.
Your PSN account will remain on Sonys servers as Sony currently has no option to delete an existing PSN account. If you intend to no longer use your PSN account, we recommend that you review your PSN account details and remove\change as much personal information as possible. Also consider changing the password for your account to something which is 12 characters in length, that uses a combination of upper and lower case letters, includes random numbers and has a number of special characters (i.e. !@#$).