I think I must have bought more text processors for my iPad than I have written stories with any of them! But even though UX Write is amongst the more expensive ones (amongst iPad apps, which admittedly are cheap), I got that one too. What sold me was the touch pad it introduces when you press a special key on the virtual keyboard. Finally a solid attempt at solving what I have said even recently, that one of the big weaknesses of the iOS is cursor insertion and text selection. It's embarrassingly tricky, really, and sort of negates Apple's postulate of the iPad as a production device.
UX also works in HTML 5, which I think is a wise choice, lets face it, text these days is electronic, and HTML is basis for so many things, including the standard ebook format ePub.
Admission: I've only started with the app myself, but read John M's review above, he knows his stuff and then some.
Why would one write on an iPad instead of a laptop? Well, it's a judgment call. But say you're carrying your iPad anyway, as an ereader, web browser, entertainment center, navigator, gaming device, etc etc. If the iPad were to be a powerful word processor, you could save a lot of money and weight by not having to carry a laptop also. And the iPad certainly has the screen and all the power anybody needs for word processing. And now it seems the software is coming along also. (Rumor has it MS has Word in the works too for iPad.) For some people like me, an external, physical keyboard might be needed, but that's just a fraction of the price and weight of a laptop. (There are many options, from Apple's own beautiful aluminium model to very light and cheap knock-offs. Here's a (slightly outdated) article of my own on that.)
There's also the "toaster-fridge": Brydge. I may get that one, I'm not sure. They are right in that the quality of the many keyboards for the iPad has never quite been up to snuff. That might be nice, and it might be nice to be able to carry them as a unit, and to not have to bring a case or a stand.