Adobe have announced Photoshop Touch, more can be found about at their website here.
It only runs on the iPad 2 (I only have the v1 😦 ), looks like that faster processor is needed. I am waiting for the iPad 3 anyway so there’s one more reason to upgrade.
Scott Kelby also mentions Photoshop Touch on his blog here too.
You can get the app from the app store, here is the link.