Ok, if it shows up in itunes then click on it in the left panel and you will be shown info about the iPad. There should be a button that says restore, click that and it will download the latest update for your iPad (iOS 5) then it will begin the restore and update process. Leave your iPad plugged into the computer until its finished. Once its done you will be able to set it up and transfer your apps and other content.
Good luck!
Edit: Yes it will wipe everything. But if you have downloaded the content with your apple id you will be able to download everything again at no cost.
Sent from my iPad 2 using iPF