I just came across the Urth Mama blog's great post on handwriting apps. The only one I've tried is Wet-Dry-Try from Handwriting Without Tears, but they all look really good. Click here to check out her great reviews!
The other great find from her post is this stylus made for kids using the iPad! It's listed on Amazon here. I've been really wanting something like this so my son can practice his correct pencil grip while practicing handwriting.