Nice video:
That clip shows how dedicated Penguin is to truly taking advantage of the iPad's capabilities. That children's book that opens the clip is really more a game than a book (kids, of course, will likely see that as a positive). The "coloring book" section is very clever, even if the idea of instantly coloring a section with a tap is likely far less fun for kids than frantic scribbling--but the point is, frantic scribbling is possible too.
Penguin Demonstrates iPad-Bound Books: Amazing, but Are These Really "Books"?
"We will be embedding audio, video, and gaming into everything we do. The .epub format, which is the standard for ebooks at the present, is designed to support traditional narrative text, but not this cool stuff that we're now talking about. So for the time being, at least, we'll be creating a lot of our digital content as applications, to be sold on app stores, in HTML.