Yes, by doing a restore of your iphone, everything will go back to how it came from the factory.
2. How many people are known to have had their phones bricked?
None that I know of.
3. When restoring your phone in iTunes, does it set it back to how it was out of the box? (no contacts, etc?)
Doing a restore will set it back to how it was from the factory. When syncing with itunes, it does a back of up the data on your iphone, i.e. contacts, texts, calenders, etc. After a restore, it will restore that information back onto your phone.