The Behringer UCG102 Guitar Link.
This doesn't really come under the heading of 'app,' so I'll post a few brief thoughts about this here.
The UCG102 is a 1/4" to USB interface for the guitar. It has an input for the guitar, and an output for headphones, which I haven't tried yet. It hooks up to the camera dock interface. Running the guitar through the Behringer into Garageband, I used the iPad's headphone input with no problem, although the Behringer has a volume control, which could be handy.
The interface was plug and play. No hassles whatsoever. No noticeable latency. The iPad had no problem powering the interface, and the battery didn't seem to be going down any faster than usual.
I haven't tried it yet with something like Amplitube, nor am I likely to, unless Amplitube will show up as a plugin in Garageband. IK Multimedia wants a few more dinerii to incorporate an 8 track recorder into their program. The amp sims in Garageband are good enough for me to be noodling around on, and are very tweakable.
So, if you guitarists are looking for a cheap way to get your guitar into the iPad, I'd recommend the UCG102.
It also comes with some basic amp sim software for the computer, but I am not going to bother installing it. I have Amplitube 3, and Scuffham amps, so I'm good in that respect. ;)
Hope this helps,