Not sure how much experience you've got, so you may already know all this.
If you just tap, the cursor appears, but it's difficult to tap exactly where you want.
So instead you tap and hold near the word. A magnifying glass with the cursor in it appears. You can drag this to place the cursor. With smaller text it can be harder to place; get close and then just roll your finger a bit left or right.
If you are replacing a bit of text, just tap, hold for a bit, and when you let go you get a selection menu. Select will select the nearest word, then you can drag the handles to include any other text you want.
Yes, despite this I still tend to miss cursor keys every now and then, but not so much as I did before I got used to these other methods.
For those really heaving typing jobs I recently got myself a bluetooth keyboard. Well, really I got a new one for my computer. The Expose key (its an iMac keyboard) had broken off and one, of the cursor keys was a bit sensitive. The old keyboard will work just fine for the iPad.
