My A-Z app is a FREE iPhone app that works and looks great on the iPad. It comes with one flashcard for each letter of the alphabet. However, students can add their own pictures for each letter of the alphabet. In my mind, this gets beyond the iPad as a consumption tool and moves into a creation tool.
Students could go on "alphabet hunts" around the classroom and/or school. When they found a picture for a certain letter, they would simply snap a picture, give it a title and even add their voice recording the picture. The students can continue to build their library of flashcards for each letter of the alphabet. This could be an ongoing project as well as a great way to assess kids with their differentiation between each letter in the alphabet.
Check out the pictures below for some screen shots explaining a little about this app.