Very keen to try one of these out. In short, if you like the Paper app, you'll like Pencil. If not, then not so much.

Pencil uses Bluetooth to tell an iPad which tip is touching its screen. If neither the nib sensor or eraser sensor are sending a signal, Paper assumes input is coming from a user's finger and initiates a "blend" mode that simulates smudging colors together. When Pencil is powered on and connected, the app enables its palm rejection technology, which allows users to rest their hand on the screen while drawing.

Neat.