Reset/restore iMac for kids' use

I am giving my 2007 iMac to the kids and want to wipe out all of my docs, photos, music so it is free for their own stuff (homework, photos, etc).
I'm running Lion and it seems that if I reset to factory settings I will have to reinstall with the discs that came with the machine which was Leopard (or maybe Snow, don't remember).
If I do that, how do I get Lion back?
Do I even need to go to that level of wiping out since it is staying here (ie., not selling it to someone else)?
If not, how do I just get rid of my data but keep Lion and all the apps?
Thanks.

The Apple Support Communities are an international user to user technical support forum. As a man from Mexico, Spanish is my native tongue. I do not speak English very well, however, I do write in English with the aid of the Mac OS X spelling and grammar checks. I also live in a culture perhaps very very different from your own. When offering advice in the ASC, my comments are not meant to be anything more than helpful and certainly not to be taken as insults.
Following the directions for OS X Restore, you should be able to erase the internal HDD, reinstall Lion and then configure the iMac for your kids.
http://support.apple.com/kb/HT4718

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