While not quite Photoshop (which will never make it to the iPad),
Photogene is pretty good for touching up photos you took with your camera. It's more along the line of Elements. There's still a few things missing, like easy red-eye reduction and a "heal" tool but I've emailed with the developers and they said they have those and many more improvements in the works. $4 well spent. If you're looking for full Photoshop, that isn't likely until we have more capable devices, a 1gz processor and 256M of RAM just isn't going to cut it.
Zagg also offers
PhotoPad for free, not a bad set of tools either at a good price.
Good luck with your contests!