Probably my favorite one is My Story. One of the things I like the best is that you can email the story, and then open it in iBooks...and it becomes a story on your iBooks Bookshelf. Students can record themselves reading the story, which they LOVE! I love apps that incorporate reading, writing and creativity. These three apps are some of my favorite!
I also like Toontastic and Sock Puppets. I have the FREE version of Toontastic. There is also a $9.99 version. That is more than I have ever spent for an app!! Sock Puppets is free, and fun.