Next is the Perform a quick format checkbox. Windows 7 will check this box by default, suggesting that you do a "quick format" but I recommend that you uncheck this box so a "standard format" is performed.
In a standard format, each individual "part" of the hard drive, called a sector, is checked for errors and overwritten with a zero - a sometimes painfully slow process. This ensures that the hard drive is physically working as expected, that each sector is a reliable place to store data, and that existing data is unrecoverable.
In a quick format, this bad sector search and basic data sanitization is skipped entirely and Windows 7 assumes that the hard drive is free of errors. A quick format is very fast.
You of course can do whatever you like - either method will get the drive formatted. However, especially for older and brand new drives, I'd prefer to take my time and do the error checking right now instead of letting my important data do the testing for me later on. The data santization aspect of a full format is nice too if you're planning on selling or disposing of this drive.