I have one on my iTouch called ArtStudio. I don't know it if works on iPad, but I don't see why it wouldn't.
Anyway, it's pretty good for an app, it's like a mini Photoshop, it lets you save your images as PNGs, but if you pay for the full version you can save your images as PSD's and transfer them to your computer to keep on workin' on them in Photoshop. It has a good number of brush options including the option to save custom brushes, layers, blurring, gradient, text, some filters, cropping, selecting/moving, and all that other good stuff.
The free version is pretty much just like the full version, only there's a restriction on how big you can make your canvas, and you can't save your images as PSDs, so the free version is worth a try.
