Apparently they do.
An undocumented feature has been discovered in the Android OS as it is distributed on the HTC Incredible, that turns the device into an incredible breach of privacy system.
As a part of the OS’s normal functionality, it grabs screenshots of your browser display. This is done so that it can display these as thumbnails to you as you switch between windows and sessions on the device.
Unfortunately, when the device is cleared – even to a factory reset – these snapshots are not deleted from the device.
Meaning that if you hand your phone, that you thought you had cleared of your personal data, to another person, think again.