As of this writing, there's only one app that does real vector drawing with bezier editing for the iPhone/iPod Touch though - miniDraw. It has a bit of a weird interface, but it works well. There are some limitations, it's a pain to add or remove points from an existing curve, and there's no way to do a copy or even as Save As... for making different version of a design.

There's an app called Bezier, but trust me, skip it. It's more like someone's curve programming exercise than an app.

For the iPad (which I don't have so I can't verify any of this firsthand) it looks like iDraw is the app to get for vector illustration. It looks quite slick, I'd love to try it. There's also an app called Freeform that has bezier editing, but apparently only circles are currently editable (!). They're working on better functionality however.

(As much as I would have liked an iPad before, simply because it's nifty, like lots of other people I just didn't feel it could do anything useful for me. Sure, there's lots of stuff to consume on it, but I like to create. Now that I see how fun an illustration app can be on my little iPod, I totally wish I could get an iPad.)

miniDraw and iDraw can bring in photos for use as a background, very useful for reference or for tracing. For when you need to get your work out of the apps, miniDraw can export (via email) an SVG file, and iDraw can export a PDF.

As far as I've been able to find out, that's it for illustration apps with bezier editing on the App store at the moment. A little disappointing, but so far miniDraw is working out quite well for me.