I am at the point where I need to add another drive.  I currently run 2 TB WD greens.  The prices justify me switching to 3 TB drives (WD Red likely).  If I assign the new 3 TB to the Parity drive position I understand that it should rebuild my parity automatically?  The old Parity drive will become a data drive.  When I assign my old Parity drive as a data drive will I have to format it or clear it somehow?  Or will it automatically erase it?  Thanks in advance!

I am at the point where I need to add another drive.  I currently run 2 TB WD greens.  The prices justify me switching to 3 TB drives (WD Red likely).  If I assign the new 3 TB to the Parity drive position I understand that it should rebuild my parity automatically?

Correct.  It will write a new parity calculation to the new drive.  You should then perform a parity check to be sure it can be read from the disk before doing anything with the old parity disk. 

The old Parity drive will become a data drive.  When I assign my old Parity drive as a data drive will I have to format it or clear it somehow?  Or will it automatically erase it?  Thanks in advance!

You can do nothing, and unRAID will clear it when you subsequently add it as a data drive, HOWEVER, your array will be off-line while it does, probably for 8 hours or more.  Or, you can use the preclear_disk.sh script on it and when you subsequently add it t the array it will be off-line only as long as it takes for you to stop the array, assign it to a data slot and re-start the array.  Your choice.