This type of reset is ideal if you want to get your device in a “like new” state, especially if you’re selling it or just passing it along to someone else.
With iOS 7, that is no longer the case! If you have 'Find My Phone' enabled,you CANNOT simply do a factory reset before passing it on to a new person if you sell the phone. If FMP is enable, Apple will NOT allow the phone to be activated until the original owner's icloud password has been entered, EVEN AFTER a factory reset.
I recently went through this exercise after buying an iphone on Craigslist. I did the factory reset, the phone was stuck at the activation screen asking for the password of the original owner, and the Apple store said there was nothing they could do. I finally got in touch with the seller, and he met me and entered his password. After that, I was able to disable FMP and set it up under my account.