Yellowtail

I thought that a few people might find this fun to play with and it is free. Here's the app's description:

Yellowtail is a mesmerizing, family-friendly app for drawing animated, wiggly lines! Just drag your finger to draw an ever-changing display of lively, worm-like textures. The software repeats your marks end-over-end, allowing you to author a line's shape and its quality of movement at the same time. A simple menu lets you clear the screen, or choose between two different animation styles.

Version 1.0 is currently known to have a bug for older iPads running iOS 3.2. A fix for this has already been made, and is currently (12/30) awaiting approval by the App Store.

UPDATE: It turns out that this app is not free anymore. Apologies for that.