How did your wipe your old iPad before you sold it?
In the settings app I found "erase all content and settings". Seems too easy. Will it work? This iPad is going to family, so I'm not too worried, but I'd like for them to start as clean and fresh as possible.
That's exactly the way to do it. That option returns the iPad back to factory, out-of-the-box settings. The new owner can run the iOS 5 setup wizard on the device and/or plug it into their iTunes library and it will behave in the same way as if they had bought a brand new iPad.
In fact, this is actually even a secure erase, so it would suffice even if you were selling the iPad on eBay. The secure erase is handled courtesy of hardware encryption built into all recent iOS devices -- since everything stored on the device is encrypted, the secure erase function simply wipes the actual encryption key rather than having to do a bit-by-bit erase of the entire flash memory chip.
Older, pre-iOS 3 devices would actually take a couple of hours to perform the same function as the earlier devices didn't use hardware encryption and therefore had to undergo the full bit-by-bit secure wipe.
@Mark: It's obviously not an IPhone the message is talking about, there's an SD card slot. But I guess you wanted to illustrate how Apple does good thinking ahead with the secure erase ? ^^