Handwriting is one of those things that seems like it should be easy on the iPad, but, in reality, it is fairly difficult. Unlike Apple's legendarily quirky handwriting recognition on the Newton or the Windows tablets of more recent vintage, the iPad is designed primarily for finger-based input, not for longhand wirting with a stylus.
Though it's not optimized for use with a capacitive pen, several companies including Vision Objects are enthusiastic about the iPad as a writing device and have developed apps that'll let you scrawl to your heart's content.
MyScript Memo uses a proprietary algorithm that'll take your handwriting on the iPad or iPhone and convert it to text. You can use any stylus or even your finger to write some words and then convert to text when you are ready to share it with a friend via email, SMS, Facebook or Twitter. You can also copy the converted text or save it to Evernote for future reference.
The algorithm used to detect the handwriting performed beyond my expectation. Even with my chicken scratch, Memo was able to convert 90 percent of what I had written. One of the most useful features was a movable palm guard that lets you cover the area where your hand sits on the screen. It works really well to block that part of the screen and prevent accidental input from your palm. You can adjust this area to make it bigger or smaller as needed. The app also includes an eraser so you can remove words and a lasso tool to remove blocks of text at a time.
MyScript Memo is a universal app and is available for free from the iOS App Store. The free version will let you convert handwriting to text using MyScript's server; an in-app purchase of $2.99 will let you convert directly on your device.