Re-purposing iMac

I am giving my iMac (intel) away to a student after upgrading to a new iMac and want to delete all my data but leave the OS and software intact.  What do I do?

Create a new Mac OS X user account, log in as that user, and delete your old account, choosing the option to delete all that user's date. Then run Disk Utility and use the Erase Free Space option, if that's present in your version of Mac OS X (I can't remember). You may have to remove personal identification from the applications themselves; some store things such as your name and address in the application's files.
It would be more secure, though, if you were to erase the entire disk, using the Zero All Data option, and then reinstall Mac OS X and the applications. That way you can be sure there would be none of your information lurking in some corner of the system. Or if that's more work than you want to go through, just erase the drive and let the student reinstall the OS and apps from the disks you'll give him/her along with the system.
Regards.

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