Well the answer to #1 is pretty simple - why would Apple include the feature to begin with if it's bad as you seem to imply? I've done a reset like this on both my iPod touch and iPhone many times without encountering a problem. Yes, 12 hours is very excessive (should be 1 hour for 8GB, 2 hours for 16GB, 4 hours for 32GB), but it doesn't wipe the OS or anything, it just sets the iPhone back up 'as new'; once it's completed successfully the phone will display the 'connect to iTunes' screen, and once it's connected it prompts you to either set it up as a new phone or restore from a backup, as if it's just been restored via iTunes. Basically it's just another means of restoring, without having to redownload the software or use iTunes to initiate it. What's happened to the OP is merely bad luck.