Update sneak peek:
Puppet pals is coming to the other iOS devices!
Video export is coming! It works really great in our testing. There are a few caveats however. We rely on a hardware chip to do the encoding which makes it fast but it also means that anything older than a 3gs (or equivalent ipod touch) will not be able to render out videos. You can still use and enjoy the app on old hardware, with playback in the app and all, but no render for youtube etc... We also rely on iOS4 so note that ipad users will have to wait for Apple to release iOS 4 for ipad to support video export.
Use your own images for backdrops and even puppets! This will open up a whole world of possibilities for creation. We can't wait to see what people create.