It's true. I have a first generation ipad and it doesn't get OS upgrades and many apps won't work without OS 6.
This is the Ipad mini that came out not too long ago. It will be supported by Apple and devs for a long while. Yours is a first gen Ipad that Apple abandoned with IOS 5.1.1. Eventually, like all tech toys, the mini will face the same faith but that will not be anytime soon.
Retina is a hi def screen display. Nothing to do with the behavior of apps.
If the majority of your users have ipad 3, ipad 4, ipad 5, are you going to make an app for those resolutions and cpus or stick to low res and low graphics settings to work with all?
When developers build apps for the latest and greatest ipad, they usually run like $hit on the ipad 1 and im sure soon ipad 2.. Just like PCs, if you want to run the latest games you need the newest cpu/gpu combo, you can still run on the older versions but it would be very sluggish
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