There are a couple of things you can try. It could be this line, though that might your main heading (like Meta below) which you probably want to want to keep.
I'm assuming you added Pages as your heading. One suggestion is removing that line and seeing if it's the one you want removed. I have a feeling this one is the Pages you want to keep.
<h3 class="sidebartitle" >Pages</h3>
The second suggestion and the one I think you're looking for is in how you use wp_list_pages. If you check the link I posted above you can see there are a lot of different arguments you can add to the tag. One of those arguments is title_li. If you don't specify it the default is that title_li displays the word Pages.
So to list the pages without the heading you want to use:
Just substitute the line above for the <?php wp_list_pages; ?> in the original code and you should be good to go.
<?php wp_list_pages('title_li='); ?>
For some added fun one of the arguments you can use and one I often end up using is 'exclude' Say you have 10 pages, but only want to show 8 of them in the menu. You can exclude the two you don't want to show from the list. You could also choose to include certain pages.
Some other things you can do are sort the pages in a few ways and control the depth of sub pages if you're using sub pages. Many of the other template_tags have their own set of arguments that can be used to control what the tags do.