Erase Customer data was not an option in older firmware (start with 071 or 072)
Updating won't lose settings if you install it via the tool we provide (The tool is required when going from 071 to 072 or 072 to 073 releases)
It also may not remove the templates or allow you to do so, there was a bug in one of the 072 releases where if you put anything in the description it would corrupt and make the template unable to be removed. If that is the case, you would need an Altboot to fix it, which would get rid of the templates as well as everything else. The Erase Customer data option does almost the same as an altboot (you lose everything)
Try the update anyway, but if the templates are still there and can't be removed, the machine would need to be wiped (Altboot).