The iPad. It is awesome. And the iPad camera connector kit is even more awesome. It works with USB keyboards. It works with USB headsets (seriously, I just spent a half hour on the phone with Kyle Kinkade on Skype voice chat that way). And, of course, it does photos. You can import photos from cameras, from SD cards, and even from iPhone OS devices.
But that's not the sum of what most people really want to do with their iPad USB ports. What people want, what they really really want, is to insert a USB memory stick and read arbitrary files off and write arbitrary files onto that device.
On that end, there's good news and there's bad news.
The good news is this. USB drives do mount properly and show up in the system as /dev/disk2s1. Yay. You can even add more drives via a hub. The iPad supports both FAT and HFS+ drives.
The bad news is this. As iPhone developer Dustin Howett discovered, that mount point is sandboxed away from normal developer use. You cannot read from or write to that disk using standard iPhone SDK applications.
Another unnamed developer did a little digging. He discovered that the iPhone supports the same kind of Image Capture Core engine that is used on the Macintosh. Unfortunately, that engine (which is backed by the Mobile Storage Mounter application in Core Services) appears to be limited at this time. The only data that can mount and be read is DCIM folders, and only through the Photos application.
That's not to say that the functionality for reading arbitrary disk storage is not available -- it is -- but it has been blocked off from general use at this time. (Yes, a jailbreak will easily bypass this limit.)
Posting the images mounted notification
Posting a notification that regular storage has been mounted
This remains in line with Apple's user empowerment policy. Just as the UIImagePickerController can only access pictures that the user selects, just as the UIDocumentInteractionController can only present documents chosen by the user, the USB system (for now) will only offer access to pictures that the user decides to move to the iPad.
Should the demand for a more general shared documents approach be loud enough and strong enough, history has shown that Apple can and does respond to the clamor of the buying public's requests.