Layers is a really polished, feature-packed natural media painting program for the iPhone. As it’s name implies, one of its distinguishing features is that it lets you paint on up to 5 different layers. That, combined with its full undo/redo support, makes it easy for even fumble-fingered people like me to create decent drawings. It also sports transparency, 8 different brushes, and a really cool feature that lets you erase portions of the current layer to reveal the layer below — something that’s fun to do with photos because you can ‘knock out’ the background around a subject to reveal the contents of another photo or a drawing below it.
Anyway, have a look at http://www.layersforiphone.com/ And yes, in the interest of full disclosure, it’s written by my son, but even if it weren’t, I’d still be incredibly impressed.