Children's books - There is huge possibility here! Unlike the Kindle, the iPad is colorful and gives the impression of actually turning pages. Children learning to read need to have their hands on authentic books. I have a 4 year old who LOVES books but when I put the iPad in her hands she wants to watch videos. Here is a screen shot of one children's book I found in the iBook store:
Writer's Workshop - We use Lucy Calkins Units of Study and it entails drawing pictures. Doodle Buddy has options for drawing, using "stamps," and inserting backgrounds. Students can create a picture, email it so it can be posted online, then students can write/type about the picture they created.
(Ignore the spider in the sky. Or you can actually write about the spider in the sky I guess:) There is so much more I am sure but I am really interested in the literacy instruction with the iPad and technology right now.