Reset Nexus One to factory default setting you will lose all of your sms and apps,so you must back up your apps and sms.
These steps will show you how to hard reset Nexus One to factory default settings:
First, try this:
1. Go to main home screen, press the menu button.
2. Choose the Privacy
3. Press Factory data reset.
4. Read the disclaimer, then Press Reset.
5. Last,press Erase everything.
6. Restart the Nexus One, you will see the phone as a brand new phone.
If that doesn’t work, or if your Nexus One is frozen:
1. Turn the power off and pull the battery out and reinsert it.
2. Hold the Volume Down button.
3. Then press and release the Power button.
4. Wait a minute,the menu appears that allows for Fastbook, Recovery, Clear Storage, and Simlock.
5. Ok,press the Volume Down button to choose Clear Storage.
6. Next,press and release the Power button,Wait for the Nexus One to restart.
7. You will see the two options: Volume Up for YES and Volume Down for NO.
8. If you choose YES, all data will be deleted from your Nexus One and including third-party applications.
9. The Nexus One will reboot to its original data.
10. This time you can restore your backed up data to your phone.