Q: My ipad always show temp warning saying that its too hot n need to cool down to use.. Why it happen?

The Basic Troubleshooting Steps are:

Restart... Reset... Restore from Backup...  Restore as New...

Restart / Reset

http://support.apple.com/kb/ht1430

Backing up, Updating and Restoring

http://support.apple.com/kb/HT1414

If you try all these Steps and you still have issues... Then a Visit to an Apple Store or AASP (Authorized Apple Service Provider) is the Next Step...

Be sure to make an appointment first...

This the safety mechanism that is built into the iPad to protect the component in yout iPad.

http://support.apple.com/kb/HT2101

"cooling pad"

Try using the iPad without the sleeve/case.

Would you be able to tell me which iPad is it?

If it over heat very often, I suggest you bring it to Apple for a check.

the iPad 3 has had some over heating issues, have you got a case on it? If so what is it made of and how much of the iPad does it cover.

The new iPad has had some over heating issues due to apple adding a very powerful processor to the iPad with a quad core graphics chip, this generates a lot of heat and if your iPad is not in cool enough air, it will just say that it is over heating and not let you use it.

Do you use it in direct sunlight a lot? Or near a window?