You are talking about the original iPhone? If so its not worth much. I sold an iphone 3gs last year and got like $50 for it.
I'd do craigslist, since there are no fees and you can do a cash only deal. Or maybe Swappa which you will pay $10 to them + paypal fees. Ebay would be great for convenience and lots of buyers but you'll pay for the convenience through ebay fees.
As far as erasing the data is concerned, I think you should be able to restore it to factory condition through Itunes.