What steps to I have to take when selling my iPhone?

I am selling my iPhone 4S for the iPhone 5, and I want to make sure that all of my data is cleared from the 4S before the buyer uses it.  I see that there are a couple of options under setters to reset the phone, so what one do I choose to use?  Should that make the phone safe to sell, so that the new owner will not have any connections to my Apple ID?  Also, what do I do with the SIM card?  I know the iPhone 5 uses a new SIM, but on the 4S, do I take it out and keep it, or leave it in the phone when I sell it? 

Step 1. Settings --> General --> Erase all Content and Settings
Step 2. Remove SIM card
Step 3. Sell it.

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