The wipe data/factory reset option just wipes all user data from the ROM.
The cache partition, boot partition, system partition, and data partition's of the phone still need to be wiped (this is what formatting them does).
The Dalvik cache is part of the ROM, which theoretically shouldn't need to be wiped after formatting the system partiton, but I do it anyway (kind of an OCD thing I guess).
Recovery's for android phones aren't perfect when it comes to completely wiping all data (something to do with how they are scripted to operate I guess), so we need to give them all the help we can get. This is why I also mentioned obijohn's wiper zip which I use before every ROM install.
As an example: If you used the Xionia recovery on a Froyo ROM it works fine because the Froyo ROM's are not as sensitive to residual data. You use the same recovery on an ICS ROM like the one you installed and you would have to wipe and format every option three times to keep from getting any residual data left behind that might corrupt the ROM.
Residual data is the killer of all the CM7, CM9, and CM10 ROM's. If you adopt a clean freak attitude before a ROM install you will experience a lot less problems with the ROM's you install.
The min CPU setting is where the CPU idles at. If you only have the ROM set for 600MHz max then you don't need the min to be so high.
With all CM7 ROM's the best settings for performance/battery off charge times is: 480MHz min (if set any higher the CPU will get hot and the battery will drain faster), 768MHz max, using the Interactive (interactive X if available) governor (this tells the CPU when and how to apply your CPU settings).
The CM9 and CM10 ROM's don't like to have the CPU settings messed with except maybe to change the governor. The exception to this seems to be the Paranoid Android ROM.
This is where your phone should be at as a default. When you need to do other tasks then you can change the settings, remembering to change them back when done.
The reboots I mentioned are for new ROM's, updates to ROM's, kernels, and themes.
My LG Optimus V is 1 and 1/2 years old because of my following these basic principals. It has not showed any signs of giving up, even after having to use it as my only source of internet browsing (helping out in the forums mostly) with the screen on for more than 6 hours at a time for several months at a time.
NOTE: I also never turn the power off unless I need to go into the recovery (I always turn the screen off when not using it). I used to work on 14 different Avionics systems on a Jet Aircraft while in the Marine Corps, so I learned that turning things on and off a lot can hasten there demise (something to do with the power surge/spike produced from turning them on and off).
