PixelMagic has all the simple stuff found in iPhoto on the Mac like levels and color correction, as well as having some nice Photoshop-Lite functionality as well. Burning and dodging with your finger is all sorts of fun, too! Seems to be a nice alternative to Photogene, which I haven't tried yet.
Also, Tiltshift Generator is really cool for blurring and vignetting effects, along with some saturation and brightness/contrast stuff. It will give your images that vintage "Toy Camera" look and also excels at making fake miniature pictures. These two apps work very well in tandem, too. Just save a pic from one app to the photo roll and open it up in the other.
The iPad is so much more than a consumption device like many have stated on these forums. I write, paint and draw, edit photos, and make music on mine, and the iPad app store isn't even a month old yet! Think about when the iPhone apps first came out, and what they do on that platform now. We're just getting started here...