No you can definitely cancel the sale after - I've done it several times (normally because the item got damaged, couldnt be shipped etc) . Once the sale is cancelled, neither of you can leave feedback, you get your final value fees back - and everyone moves on.. cut and paste from my ebay account...
[color=#333333][b]
Hello,[/b][/color]
You've sold this item.
If the item is lost, broken or out of stock, or the buyer requests a cancellation, select [b]Cancel order[/b] below and issue a refund.
If the buyer paid using PayPal, their refund will be issued automatically. Once they receive their refund we consider the cancellation complete. If they didn't use PayPal, please issue their refund manually within 10 days. The buyer will need to confirm that they've received their refund in order to complete the cancellation.
Orders can be cancelled up to 30 days after the item is sold. Once the refund is successful and the cancellation is complete, you'll receive a final value fee credit.