I've been looking for an excuse for days now to tell someone outside of my immediate family that Starfall finally ported the "Learn to Read" section of their website to an ipad app! Previously, they had only ported the Alphabet part. I downloaded it a few days ago, and so far it's great. Slightly better organized than the website, and of course, a tap-able interface.
I so wish they would have had this done for my daughter to use when she was learning to read. It would have saved me a lot of trouble, as she forced me to click everything for her for months. Eventually I grabbed a USB mouse and told her she was going to learn to use it. She immediately started using the touchpad like an expert, having apparently learned perfectly well how to use it without ever having touched it.
Other great apps include matching games, puzzles, Bob Books. CandyCount (color sorting and counting) and a shape matching app from technolio (which also speaks the names of the shapes in English or Chinese, maybe other languages, too). There are a few Montessori inspired apps that are nice as well (some that are not as nice).