Here's a video of a sweet little iPad application that was sent over by Ken Matsui of mkftr. It's for kids, based on those old magnet drawing toys. There's not much to it, but what there is looks simple and easy-to-use. This seems like the perfect type of application that works better on a bigger screen like the iPad -- while there are a few of these available for the iPhone already, having a larger touchscreen to create some temporary art on will be a big benefit for the new device.
I know my littlest guy would have fun using it, and if you've got small kids and a long car ride, Mag Canvas may entertain for as much as five or ten minutes. That might not sound like a lot, but to parents, those few minutes can be a really blessed break. Mag Canvas should be available for the iPad right at launch.