From what I saw of it, I'd go so far as to say it transforms iPad apps in that you slot the pad into the dock and it communicates with the outside world with all the usual connections (audio jacks, MIDI, USB, etc.) and those music apps which are just kind of novelty toys on their own and self contained within the iPad itself become proper tools which you can easily plumb into your audio system much like you would a 'proper' piece of hardware.
In fact, it will be interesting to see what effect the iPad/iDock combo has on the development of hardware synths, etc.. We all know that modern h/w synths are essentially s/w internally and we pay for the knobbage, the (limited) LCDs, D-As, I/Os, casework, etc.. Well, a lot of that is overcome with the iPad and its touchscreen and knobs and displays effectively come for free in iOS (and aren't really restricted by physical limitations) and the iDock provides all the D-As and I/Os.
And yes, I'll pre-empt those who will shout with despair "But it's not the same as having real hardware with real knobs" by agreeing - it's not the same but it's an interesting development nonetheless ... and it's still in its infancy.
But I have a sneaking suspicion that in time, the iDock could become almost as ubiquitous as the Alesis ADAT I/O!
Website / Music Lab Machines / Blog