Notability is a great little iPad app that lets you write and/or draw on the iPad screen. This inexpensive app ($0.99) offers a number of features including: advanced word processing, pdf annotation, linked audio recording, auto sync, media insertion and library organization.
The notes below were created by my daughter in preparation for her math exam. I have included screen captures here, as well as a link to the original pdf document.
This is certainly a well priced capable program.