Good luck with it! You will be the first person that I will have encountered who has tried a factory reset with Windows 7. I hope that all goes smoothly enough. I'm almost certain that HP will try to answer any questions that you have should you need advice during the process since they are trying to remain competitive on customer service.
You mentioned your wife's craft programs. I take it that they installed and worked properly in the past before the camera software messed things up. I'll give you some of my other thoughts on software for what they may be worth.
HP and many other manufacturers often include "trialware" with their original installations. Companies often profit by being paid to offer trial versions of software in hopes that customers will 1. either like the trial enough to go on to purchase the full product or 2. purchase a full product not so much due to liking it as to following the path of least resistance and sticking with it because "it's there."
When I help out friends with their computers I often run a nice utility called The PC Decrapifier (free). You may be interested in reading this review of the program: http://goo.gl/4D5FV
Originally called the Dell Decrapifier, you can see that it is designed to help owners of new PCs from any manufacturer (and yours will qualify as new once it's restored to factory settings). It will also work for not new computers, too, by helping to uninstall other unwanted software. I've used it both ways--for new and not new PCs.
Use it only if you feel comfortable, however. Otherwise, you can go into Programs and Features and uninstall each trialware program separately. I'm a strong believer in choosing what I want to be installed after reading reviews and not having programs installed for me. That includes programs that hitchike or piggyback on other software. Please take a look at this article that I wrote for this forum:viewtopic.php?f=6&t=307
Since I'm not a gamer and use my Windows 7 home computer mostly for office applications, volunteer work, and keeping up with family I have a minimum of additional software installed: antivirus and personal firewall (paid) , Microsoft Office (older version), Firefox web browser (free), Foxit Reader (free and NOT Adobe Reader), backup software (free--I don't care for Windows backup), Picasa photo software (free--and it should see your wife's camera fine without needing her software), Java, Flash, CCleaner (all three free), and paid software for my income tax.
As I said, I certainly hope that the restore process went well, and that Windows is busy doing all of its security updates. Regarding the updates, here's a caveat if your factory reset is for Windows 7 without SP1 (if it includes SP1 then disregard the rest of this paragraph). I looked up your HP model and whether there was any discussion about SP1. Take a look at this post: http://goo.gl/Pfn1B
and you can see that if you are running an AV program during the SP1 update you may have trouble. General advice is to manually install SP1 before installing AV software.
When you get to the point of removing trialware and installing your desired software please feel free to post any questions about that step.
I hope that I have given you some useful information so that your wife will once again be able to enjoy her new laptop.