Clean and check for damage
Take the battery door off (you probably don't do this often anyway), and brush out the inevitable crumbs and bits of refuse that end up stuck in there. You're probably thinking, "Why does that matter?" During the course of an in-person sale, the buyer very well may open the battery compartment to check it out, or to test a SIM card. If it looks like you use it as a dinner plate, that's going to give them pause.
Be straight up about any issues with the phone. If there is a scratch on the screen, or a dented corner, make sure the buyer knows it. You don't want to have to haggle over a new price (or partial refund) if an item is not as described. A buyer you've shipped to might insist on returning the phone, meaning you could be on the hook for shipping.
Take your SD card with you, or not
If you are sending the card along with the phone, you will want t format it. You can do this if from a computer if you plug the phone in and mount it a s a USB mass storage device. Just use your operating system's file browser to format it as you would any card. On the phone, you can format the SD card even more easily. Just go to Settings, then tap on Storage (this might be different if your manufacturer has altered the menus). Here you should have the option to format the SD card. Make sure you have your pictures and other data backed up first.
Reset the phoneSince you keep your life in that phone, you want to clean out its internal software just as much as the casing. On most versions of Android, you can format the internal storage in two ways. If you have the phone on, go into the main system settings. Go to Privacy, and tap Factory data reset. You will have to go through several screens to confirm you want to do this. When you reset the phone, it will be running the unaltered software loadout it came with.
Make sure that if your phone has internal memory that is separate from the system ROM, that you have cleared that out as well. The Nexus S treats this as an SD card, so you will be given the option to clear it in the Storage menu, as well as in the system reset process. The Droid Incredible has an 8GB extra partition that stores some data. Make sure you have chosen to format that as well.
Grab your SIM (GSM only) and get a chargeThe heart and soul of your phone is the SIM card if you use a GSM network. This chip carries your subscriber info and lets you make calls and get data on your carrier's network. Before sending out, or meeting up to sell the phone, take this out. You're going to need it in your new phone. If worse comes to worse, you can go to your carrier and request a new SIM card, but you don't want to have to make an unnecessary trip.
If you're meeting a seller in person, they may want to plug in their SIM to make sure the phone works. You'll want to have enough of a charge that the phone will boot up and connect to the network. Similarly, they may want to get a CDMA carrier to verify the phone before handing over the cash. This is less important if you are shipping the phone, but it’s still common courtesy to not send a drained battery along.