The iTikes Canvas looks very cool - I don't think I would buy it if I didn't have an iPad, because it's just an etch a sketch and that's not worth $40 in my opinion, BUT with the iPad, it looks great!
The case and the stylus add a little something to just a regular app that will help kids create art with it, without breaking the iPad or getting frustrated with the app controls.
Works with iPad 1, 2, and 3.
Also, check out the iTikes Map:
This one is the same idea as the iTikes Canvas - but geographically based instead of artistically based.