Bingowings said:

How the minds of droids work is not fully explained in the films.

Obi-wan in the PT assumes they don't think and is and expresses relief that they don't (presumably fearing some Cylon style uprising).

In terms of writing, story and audience response the Artoo and Threepio are meant to be every inch real and worthy of our empathy as Han or Leia, only the majority of the humans and aliens in that universe see them as utility objects.

Artoo certain has character, demonstrates initiative, courage, empathy, fear, sadness, humour, surprise etc.

He may be mimicking those responses but the audience is clearly meant to buy into that behaviour.

So a memory wipe is the equivalent (in terms of audience response as defined by the OT) as death of personality or 'soul'.

It parallels the Vader persona overwriting the Anakin persona.

It might be interest to create a pre-wipe persona for Threepio which is more like the droid's less fussy, less self centered identity which we see in unguarded moments.

Like his offering of his components to repair Artoo and his concern for the other heroes on Bespin before he gets shot (even though they do keep treating him like an annoying ring tone).

Ehhhhhh....this is a little bit to heavy for me. Honestly, C-3P0 really doesn't deserve that kind of attention. I love him, but this isn't a story about the tragic loss of a droid's soul.