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On a Kobo Touch (firmware v1.9.16) you can do a Factory Reset by going to:
Home>Settings>Device Information>Advanced and hit the "Factory Reset" box.
Holding the power button off for a few seconds merely puts it in a "Power Off" state.
That may imply a slightly lower battery drain, or not.
There was a comment somewhere that powering on and off performs a sort of reboot, which clears stuff like Google Analytics data etc. You'd have to check the relevant thread to confirm what exactly it might do though.
Powering off does not perform a factory reset, at least not on my device. But a Factory Reset as outlined above WILL wipe your device to the state it left the factory i.e. original firmware, and no books.
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