Buying the iPad
First things first: buying the iPad. Sure, you can get one from your local Apple store, but why not try to save yourself a couple of bucks and get a used one? After all, you'll need to open the box to customize it anyway, so she won't know -- and shouldn't care -- if you bought it used or new.
In the past week, I've seen a noticeable flow of WiFi-only iPads up for sale on Craigslist, as many are being displaced by 3G iPads. Because the WiFi-only iPad has only been in the market for roughly a month, and because its use is more wear and tear prohibitive than say, an iPhone, you'll likely find many an iPad in very good condition. And if it comes with original packaging, great. If not, don't sweat it. It's what's inside that counts most.
Photos
Let's start with photos. Just picture the look on Mom's face as she peruses through pictures of all her loved ones -- you, your siblings, her grandkids, and other family. Photos on the iPad are organized by albums, events, faces and places. While you can certainly choose to sync all of your photos from iPhoto, that may not make the most sense for everyone. For instance, you may be limited on space, and there may also be many photos that you may not want Mom to see -- for example, of you chugging on a beer bong during your rowdy college days.
To make mom's iPad look "full" of photos, plan on syncing at least 12 albums and 12 events. In portrait mode, this fills the iPad's screen with three thumbnail stacks per row, going down four rows.
You may also want to sync different faces via iPhoto's Faces feature. While Faces is a great feature, the process of confirming face with name is time consuming, especially if you have a large photo library. One way to speed through this process is to mass reject faces during the confirmation process. It's similar to how you can mass accept a face and name by selecting a group of photos with your mouse, except that you just need to hold down the command and option keys at the same time.
While the Places feature in iPhoto is nice, geotagging your photos may be too time consuming. As geotagging on standard digital point and shoot cameras is a fairly recent phenomenon, you'll spend a great deal of time looking at your photos to figure out the location of your photos. If you have the time or a relatively small photo library, or just want to tag the photos you plan on syncing, then great. If not, it's not a big deal.
The iPad also makes a great digital picture frame, which Mom can place on her desk or bookshelf when she's not using it. The picture frames settings on the iPad are accessible via "settings" and tapping on "picture frame." There, you can choose transitions, zoom, whether you want to shuffle photos, and whether you want to display photos from a specific album. To get Mom to use her iPad as a digital picture frame, she just needs to tap on the photos icon (a flower) when the iPad is in lock position.
Calendars
No one likes to forget a birthday, special event or special day. While Mom may not throw birthday parties for you at Chuck E. Cheese's anymore, it's nice to remind her that your birthday (and everyone else's) is coming up. Although you can certainly setup a calendar and manually enter events on the iPad, entering them on iCal or Google Calendar is also an option.

If you have a MobileMe account, you can share your calendar in iCal by clicking on "File" and selecting "Publish." You'll then be given a webcal-based address of the calendar as well as a web-based one. The web-based page calendar has a link to the webcal (.ics) address of the subscription. If you tap on it with Mom's iPad, she'll subscribe to this calendar.

For those who have a Google Calendar account, setting up Mom's iPad is similar. Just go to the Google Calendar that you set up for her (it's a good idea just to create a sub-calendar on your account instead of a brand new account), and click on "calendar settings." Then, go to the "private address" area and tap on the green "iCal" button.
YouTube
You and your siblings have all these videos of firsts for your kids -- first steps, first words, first anything -- and would like to share them with Mom. Only problem is, everyone is scattered in different cities and states, making it difficult for her to see her grandkids.
Some of these moments are captured on video, and one of the best ways to share them with her is through YouTube. Just sign her up for a YouTube account (without her knowledge), and add subscriptions of all the accounts of family members. Now, whenever a new video is available, Mom can see them in her subscriptions list. If YouTube's privacy settings aren't up to snuff, you should be able to use Facebook or Vimeo video as well -- both should play OK on the iPad.
And Lastly...
Everyone loves music. Yes, even Mom, who probably went to her fair share of concerts and had a wild time (which she won't discuss) during her youth. If you happen to know or have access to your Mom's music library, great. You can import them into iTunes if you have the CDs, or you can purchase some of her favorite songs in iTunes. But if you're not exactly sure of her taste, an iTunes gift card is a good option. She can use this to buy some of her favorite songs, movies, books (through the iBook store) and apps.
Last, but not least, don't forget to buy a case -- preferably one that stands up, so she can use it as a picture frame. Just tie a red bow around it and you're all set.