I could go on, but this is the kind of app that's better seen than explained:
I especially like PhatPad's option to sync documents with Dropbox. This is one seriously cool tool, with loads of useful features and an interface that's easy to master after a few minutes of fiddling.
I do have a couple complaints. First, there's a bit of lag when you're scribbling, so the feeling of writing on paper isn't quite there. Second, the shape recognizer definitely needs work. Most of the circles I drew didn't get recognized at all, and some squares ended up as rectangles -- while any deliberate rectangles I drew didn't get recognized.
Also, it would be nice of PhatPad let you choose some backgrounds other than basic white. But overall, it's an incredibly handy app, and well worth the $4.99 price of admission.
Of course, if you've found a notetaking app you like better, by all means tell us about it in the comments!
One last thought: If you're not comfortable jotting notes and images with your finger (it still feels unnatural to me), consider picking up a stylus. I'm partial to the executive-class Brvsh stylus ($26.95), but if you want something simpler (and cheaper), check out the $14.95 Pogo Sketch.
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