Finding a good, inexpensive app can be time consuming. There are lots of apps out there and not all are worth the space on your iDevice or cost. In my opinion, a good app has to be better than the traditional pencil/paper handwriting book. It should TEACH, MOTIVATE/be FUN, and offer FEEDBACK. The ability to adjust the difficulty level is important. One feature I wish all handwriting apps included is the phonics connections. Say the letter/sound as the child is tracing please!
Repeated from previous post for new readers...
Perhaps you worry about kids learning letters using finger tips rather than pencil grips- I say don't! You can make your own conductive iPad pens using old markers, conductive wire, conductive sponges and duct tape. See my instructions, below from an earlier post. I hadn't seen or heard of a sturdy, inexpensive stylus last fall so I made my own! My students use them for writing with the iPad.
Link to blog post about making your own home-made, cheap, durable stylus.