I knew that somehone would have to come up with a good app. The iPad is perfect for this type of thing. I just bought the app and while not perfect, it doesn't let you do the letters out of order for example, it is a great tool. I love that it has various writing tools to choose from (shave cream, gelatin, etc.) and even though that isn't like writing in real shave cream, it is nevertheless a neat thing. You can add custom word lists, too.
FizzBrain Touch and Write
is available for cursive and print.