This weekend my wife gets an iPad 2 and my daughter gets her very own iPad 1. Before each passing I take a serious amount of time preparing the device. I don't reset the device. I take the time to make sure it does what everyone expects.
I delete my email accounts and create new ones for my wife.
I manually delete a large number of apps. My wife does not do a good job organizing her apps. I take this opportunity to clean everything up.
I delete cookies and cached Safari data.
I get rid of TextExpander. She doesn't use it and nothing is worth than having your text change if you are not expecting it.
I change her notifications to only show email and meetings.
I Clean the outside as well as the inside. I also plan to buy her a new smart cover and remove the GelaSkin from the back. At that point it should be a close facsimile of a new iPad 2.
For my daughter, I plan to delete everything except for her toddler games. I'll then raise all of the parental controls to turn off everything except Find My Friends. I'll use that to locate the iPad when it's lost.
I'll also block In App Purchase. I will turn off the device lock though. That should get the device to a level that a toddler can use it without much concern or pleas for help when the unexpected happens.