I've been playing with the animation app called Doink and combining it with green screen FX in iMovie. Below is a short video showing a layered animation over still images.
There are SO many possibilities for this technique.

 I created this tutorial showing the iPad steps for making an animation in Doink,  the steps I went through to use that animation as a video layer  in iMovie over still images and video. See below or at this link.

View my other post/tutorial called, The Aliens Have Landed, about how to make aliens run using Doink.

You can view my students' video all strung together in iMovie at the link above as well.

You may be interested in viewing my post that shares some tricks for using green screen with animation created in Keynote.

These tutorials show how to create our award winning Fugleflick, Careers in Art. This video was selected as the best student video of 2011 in the NextVista.org student contests.

You may also be interested in trying Rotoscoping on the iPads. 

This is the technique that helped us put STEAM in the McGraw-Hill Stemie Awards and $5000 in our school's bank account!

View a bunch more ideas for Creating on iPads on my page dedicated to this topic here.

UPDATE: Carol shared her green screen + Doink animation with me below:

Way back when I was first playing with iMovie to make videos for my students I had to go through a very complicated process to do special effects. Be Kind to Your Erasers was filmed as two layers: one for the the finger and one for the lips. I used a third-party plug-in to create a picture in picture FX and did my best to layer the lips on to the fingers. It was inaccurately placed at times if the finger moved too much and the coloring didn't blend well. But, the results worked for me. I was only trying to convince my students to be kind to their erasers.
I remember destroying a Barbie Doll for the hair, painting a finger themed school room background, and using a twist tie for glasses. I was having a blast, giggling and playing like a 10 year old while putting the story together. I think I spent only a day or two of my summer vacation working on this video, but learned enough about editing imovie, script writing, and organizing a video to start doing this with my students the following school year. This is my favorite way to learn technology; by playing.

Now that I've acquired an iPad, I'm finding that there are apps that can be used for awesome video FX that would make recreating this movie much easier.
Funny Movie Maker- layers video over images (the lips effect). example
Paper Camera- makes rotoscoped looking videos. example
Doink-makes animated movies a piece of cake (like Flash but easier interface). example
Brushes- makes video from every stroke and choice made in creating art. example
FaceJack- does what Blabberize does for making an image talk. example
Puppet Pals or Explain Everything-make animated videos w/audio example

What else can we add to this list? Please chime in!