SUPER WHY! is a free app from PBS Kids. Well, it's free right now. At some point in the future it will cost $2.99.
So why am I recommending SUPER WHY!? It's a children's reading app, that's why!
The description bullet points:
-Play four original games that help build literacy skills
-Practice the alphabet, rhyming, spelling, writing, and reading
-Interact with main characters from the TV series SUPER WHY!
-Learn from your mistakes in a fun way
-Please note that this application requires an additional 17MB download
There aren't many reviews yet, but so far reviews are good. It looks like a fun set of games and it's hard to go wrong with free.