I'm sure there are a lot of people interested in iPad development. There are a lot of options out there from the standard Xcode across to Flash CS5. This post will attempt to stay current with all the available development engines. Please PM me or post a comment if you have any additions or corrections.
Note: To actually build and install on an iOS device you will usually need an Intel based Mac running Snow Leopard. The exceptions to this are Flash CS5, Airplay or DragonFire which can build and install on PC or Mac. If anyone knows otherwise please post a comment and I will update this post. You will also need an Apple developer account which costs $99/yr.
Note: Cross platform refers to the target platform which may include iOS (iPad, iPhone, iPod touch), Android, PC, web, console. Generally iOS development is done on a Mac, PC development is done on a PC, Android and Web could be either Mac, PC or Linux. Ideally, you should be able to create an app for one target platform and recompile it for a different platform with minimal changes. Additionally, some of the engines have a different version for each OS that needs to be purchased separately (I.e. Unity).
Xcode - official development environment
This is the main IDE for app development. Requires you to be a pretty solid programmer with C++ and Objective C. Not for the timid. There are a number of frameworks available to assist with graphics and physics, probably the most common one being Cocos2D.
A cross platform development environment that allows you to use straight C++ to develop iPhone, iPad, Android and PSP apps. Works in Xcode on the Mac but allows you to avoid using Objective C. The PC version allows you to create iOS apps without needing a Mac! I really have to wonder why anyone would use the straight Apple Xcode SDK with an option like this. Even if you like the Xcode environment you can be cross platform with the same codebase using Airplay. Free for iOS if you make less than $100K/yr. I know someone who has been using this and he swears by it.
C and C++ development for iPhone and iPad. Runs in Windows or Mac and can create iOS apps with the Windows version! This sends your code to their server to build the app on an actual Mac and then sends the app back to you. Looks like you still need to be a registered developer to actually run it on your iDevice. However, they do allow you to publish free apps through them without having to register with Apple. I assume you would only be able to run it in the simulator to test it in that case.
Corona is a simulator and compiler for iPhone, Android and iPad apps. It uses the LUA scripting language and includes a physics engine, sprite animation and hooks into the regular iOS stuff. Appears to be well supported, has an active forum and regular releases. It was used by that 14 year old kid who created the #1 physics puzzler. Free to use until you publish something and then the fees are quite reasonable. No royalties. [update: I have been using it and it's pretty solid. Very high level and forgiving for those of us who don't want to manage every last spec of memory. I was able to get something up and running very quickly and it's the easiest by far for actually getting your app on the iPad/iPhone. Good example code on their site and an active code exchange community.]
Torque for iPhone (probably DOA)
I tried this engine for iPhone development as I was impressed with the 2D engine for the PC. This turned out to be a major exercise in frustration. There was little documentation, all the support was through the forum and I couldn't even run the tutorials out of the box. This was a few months back so they may have got it running better by now but it was such a poor experience that I won't be going back. Set me back $600. [Feb 27/11 - update: looks like the guys who make Torque have gone under and put the engine up for sale]
Unity3D for iPhone/iPad
Unity is a solid cross platform engine and they boast a large number of published apps in the app store. It's a full environment that includes a 3D editor and integrated scripting system. It's not for the casual user but it's a thousand times easier than working in Xcode for non-objective C types. If you are familiar with 3D programs such as Maya or 3D Studio Max then it will be a breeze to learn. The PC version is free but the iPhone/iPad version is $400. Quote from indie game developer Graham Jans: "I've used a lot of game engines but Unity is the first one that gave me a hug". Check out his awesome Unity game at zombieminesweeper.com.
I don't have any experience with this one but it looks to be an up and coming contender for Unity. Cross-platform, lots of apps, full 3D, etc. Similar pricing structure to Unity.
Great environment and cross platform. I suspect that somewhere the overhead of Flash will bite you in the ass but I haven't done enough with it yet to hit that point. I also suspect that Adobe will not be supporting this whole hog as long as Apple has a grudge-on for Flash. One of the few that lets you develop and deploy on PC or Mac.
This is a code-free environment that is supposed to be easier for artists and designers to use. They have a few apps in the store that seem to be running reasonably well though I found the loading of menu screens to be a bit slow.
iOS version of this is $99. They don't seem to have any apps in the store yet from what I can see.
This is a cross platform engine based around web technologies like Java, Html, CSS, etc. They have a number of apps in the store and it looks to have a lot of grass roots users. Similar to Appcelerator but supports even more platforms. If you are familiar with coding websites take a serious look at this and Appcelerator.
Here's another good list with some comparisons The Commercial iPhone Game Engine Comparison (3D and 2D) | iPhone, iOS 4, iPad SDK Development Tutorial and Programming Tips