I reset the ipad completely before selling it but did not sign out of my itunes account. Will there be any problems for the new owner signing in his itunes account with a 'new' ipad?

Shouldnt be. They will just have to sign sign you out via the Store setting in the Settings screen. And no, they will not be able to buy from your account on the ipad. it will ask them for your password, which they will not have.

How did you restore it. A full restore would have put it right back to how you received it, with the plug me into iTunes screen. If you used Erase all Content and Settings under Settings >> General >> Reset, you should still be ok. That should have removed your account information.

Complete reset with erasure of all content was done from ipad settings screen NOT connected to itunes. The ipad is in the original mode "Connect to Itunes" screen.

When the new owner connects to itunes for the first time will it go to MY account automatically since at one time this ipad was connected to itunes? Or will it just ask him to establish a new itunes account and sync up?

No. You are good to go. The iPad now has no more data on it than when you got it brand new. The new user will have to initialize it with iTunes and set up his/her own account.

I wasn't sure the full erasure on the iPad would go that far, and for some reason didn't feel like experimenting.

Thanks. I will know better in the future to sign out first! But it's good to know my account won't come up even if it still password protected.