Do I have to restore to unlock?
Ask for Unlock. Apple's instructions are
- Backup
- Erase
- Restore
Do I have to restore? I'm selling the phone and need to erase it anyway
Yes, you must restore it to unlock it. Restore means erase. If you are erasing it anyway, there's no problem with you restoring it.
You don't have to set it up again after you restore it however. You should leave it at the "Hello" screen so the new owner can set it up.