Chapabu is correct, but if you're using drush 5.7, this is unnecessary with site-install. If there's an existing db, drush will warn you it will drop all tables in the existing database.
For example:
drush dl drupal --drupal-project-rename=test
cd test
% drush site-install standard --db-url=mysql://root:root@127.0.0.1/test --site-name=test
You are about to create a sites/default/files directory and create a sites/default/settings.php file and DROP all tables in your 'test' database. Do you want to continue? (y/n): y
No tables to drop. [ok]
Starting Drupal installation. This takes a few seconds ... [ok]
Installation complete. User name: admin User password: 6SkT989sPX
So let's rerun the site-install command over the now existing "test" directory
% drush site-install standard --db-url=mysql://root:root@127.0.0.1/test --site-name=test 130 ↵
You are about to DROP all tables in your 'test' database. Do you want to continue? (y/n):