Your question really should be: "Can apps still support iOS 5". The iPad part is largely irrelevant. It's just that the iPad 1 can't be upgraded past iOS 5.
The short answer is "yes".
However, you must use Xcode 5 because your app must fully support iOS 7 and this requires Xcode 5.
With Xcode 5 you can set your project's "Deployment Target" all the way back to iOS 4.3. Though there is little point to that. If you want to support iOS 5 then set the deployment target to iOS 5.
Of course you need to avoid many things such as auto-layout and you must do proper checks to avoid using classes or methods that don't exist in those earlier versions.