The q-Jays work fine with the D2 due to their higher impedance and low sensitivity (i.e. no background hiss, better bass response). They're lovely phones for sure.
You can format the internal memory directly from the D2's "settings > system > clear memory" option, or you can format it with the Panasonic formatter in "quick" mode. This should be done after you upgraded to a new firmware, just to make sure (knock on wood
). But it's probably not really necessary - contrary to the SD formatting, which is essential. For the SD card you should choose "full (erase on)".