What apps are out there that take advantage of networking between two ipads... is there maybe a version of battleship? We just got our 2nd ipad today and we'd like to have some fun with both of them at once!

The only ones I can think of of the top of my head are Let's Golf and Let's Golf 2. They will play across a local network. I'm sure there are others.

There are tons of games that use wifi multiplayer. I think I remember battleship being wifi multiplayer a while back, or a generic variation of the game.

If you have iPhones, Scrabble has some really neat features on how the phones and iPad interact for a multiplayer game.

Scrabble works great also with iPhone or ipod touch as well

Need For Speed will let you race two cars between iPads, iirc.