Here are some great apps for preschoolers and perhaps older children. For the most part I am cheap so I usually get the free app and if something is very good I upgrade. Most of the recommendations below are free or .99.
Angry Birds ( ok this one is for you, but you can get it under the guise of needing it for your child.)
Cut The Rope
Hidden Pix (think Highlights magazine from when you were a kid and email was 12 years in the future)
Uzu ( babies like this one, not that I encourage babies to use an iPad)
Yertle (dr suess book)
Toy Story ( part e-book and part coloring book )