Have you had it for 14 days? If it's within 14 days, you can take it back and get a new one. After 14 days, you either have to keep it, or get a certified like new (refurbished) replacement. If it hasn't worked since you got it and you've had it less than 14 days, I'd take it back and either let Verizon get it working, or give you a new one. It might only need a new SIM card, but if it's under 14 days, don't waste much time trying to fix it yourself.
Now, as to how to do the factory reset, go to Menu/Settings/SD & phone storage/Factory data reset at the bottom. Be aware that when you do it, it wipes out all of your settings and apps and takes it back to the way it was out of the box. You can always replace all of your apps from the Android Market by logging in and clicking on My Library at the top and apps. That will show you all of the apps you've purchased and downloaded. You can do the same at Amazon by clicking on Your Digital Items, then Your Apps and Devices under Amazon App Store For Android.
Before doing the reset, I'd go to Menu/Settings/Backup Assistant/Google/Sync now to make sure your contacts, Gmail, Calendar and other Google items are backed up. You can also go to Menu/Settings/Privacy and click on Back up my settings and Automatic restore which sometimes will restore most of your apps and settings. Sometimes it has worked fine for me and other times not a well. I use MyBackup from the market and do a complete backup of everything before I do a factory reset. You can have it back up everything to your external SD card. A factory reset, will wipe your phone's memory, but when you open Factory data reset, it will give you the option to check Erase all data, or Erase SD card. Leaving those unchecked will preserve your music, pictures and any data on the external card.
Sorry if I told you things you already knew, or more than you needed. Good luck.
