PhatPad for iPad on the iTunes App Store
PhatPad offers everything you need to express your ideas, enabling you to draw pictures, jot notes, or put a mixture of drawings, images, handwritten and typed text on a virtual scratch pad. The included handwriting recognition engine automatically converts your handwritten notes into digital text, and PhatPad even takes objects you scribble and translates them to perfectly formed shapes.
I loved my Newton for these very features. Can’t believe Apple didn’t include them in the iPad. Jury is still out on how well it works.