This is a bug to add a "Reset default settings" item in the Preferences panel. I think this would fit in the Privacy and Security sub-section, under "Clear Private Data". (unless this affects other settings which are not privacy or security related. is it?)
This reset to default as far as i know.
Madhava - is this something we want?
We have a pretty simple set of preferences (and should be working to keep it that way). I'm wouldn't have thought this is something we'd need, and, if we did, I'd think maybe we'd do it as a long tap option on each pref (reset to default).