How comfortable is too comfortable?

Yesterday morning, as I was taking Benton on his morning walk, I saw our new neighbor smoking on his front porch with nothing on except bright red briefs. I am a pretty modest person, so this stunned me and kind of grossed me out (ok, more than kind of). He finished his cigarette pretty quickly, and then went inside while I refused to look anywhere besides straight down at the road.

Here's my question: I was planning on making cookies (like we've done before for previous neighbors) to welcome them to the neighborhood. I don't really feel like doing that anymore, even if Kevin comes with me. Does that make me a bad neighbor? Clearly the husband (he has a wife and two children, I believe) feels pretty "welcome" in the neighborhood already.