I tried both the USB and the card reader to transfer photos tonight and not really happy about these devices. The readers don't recognize 100% of the time. I had the same issue popping up on both mine and my wives iPad. When i insert either the card reader or the the USB camera adapter the iPads do not recognize necessarily on the first try and sometimes they took two or three tries. I also noted on two transfer events, I ended up with two or three copies of the files i transferred. I had to delete and repeat a few time to get a successful file transfers so we could enjoy some photos. These things are quirky.
I also tried both readers in an iPod and iPhone, both gave non-compatibility errors. I also tried a Microsoft USB head set plugged into the iPad via the USB adapter. I got an error stating headphones not supported, which leads me to think the USB port could support proper iPad devices.